Orica Limited | ORI | Materials, commodities | ASX

Performance  |  Valuation  |  Growth  |  Summary |  Balance Sheet  |  Income Statement  |  Cash Flow

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Intrinsic value and stock valuation

Market Capitalization and Net Worth

Net worth also called as "Shareholder Equity", "Stockholder's Equity", "Net Asset Value" or "Book Value". It essentially means total assets minus total liabilities.

The above chart displays the share price and the book value per share. Generally the share price is above the book value price but during a recession (e.g. 2008) or due to some other factors, the share price can go below the book value per share. Smart bargain investors buy shares when the current market price is below the book value i.e. the stock is undervalued but at the same time you have to ask yourself why the current market price is going below the book value price. Is it because of some serious fundamental problems with the company?

Current Market Price : $17.59 on 26-February-2019

Enterprise Value of Orica Limited is $___   (Sign up for Premium Service to see the enterprise value.)

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Stock Valuation Models

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Current & Historical Price to Earnings Ratio of Orica Limited

The P/E ratio looks at the relationship between the stock price and the company's earnings. The higher the P/E the more the market is willing to pay for the company's earnings.

By comparing price and earnings per share for a company, one can analyze the Market's stock valuation of a company and its shares relative to the income the company is actually generating. It is usually used to compare the P/E ratios of one company to other companies in the same industry sector. Ideally you should avoid investing in a company which has a PE Ratio greater than 20.

Orica Limited Average PE Ratio : ____ ( Paid membership tells you if current PE is lower or higher than long term average PE )

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Discounted Cash Flow Valuation

The purpose of a discounted cash flow is to estimate the sum of the future cash flow of the business and discount it back to the present value.

We start with an assumption that we want to earn 10% on our investment yearly. So the question we are going to answer is "What price can I pay for Orica Limited if I want to earn 10 percent annual return". We use the multi-year median Free Cash Flow growth rate for DCF valuation. The discount rate and the estimated cash flow numbers are then used in the net present value formula which calculates the intrinsic value of the company as well as the intrinsic value per share.



Net Present Value is ____ $

DCF Intrinsic value per share of Orica Limited : ____ $

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PE Ratio Valuation

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EPS Growth Valuation

Similar to Free cash flow valuation model we project the Earnings Per Share for the next ten years. Then we use an estimated Price/Earnings ratio to calculate the future stock price which is then discounted back to present value giving us an intrinsic value per share.

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Graham Number Valuation

Graham Number was created by Benjamin Graham, the father of value investing. It calculates the stock's maximum fair value based of its Earnings per share and Book value per share. Stocks trading below their Graham Number may be undervalued.




Note - Graham number is useful for companies which depend more on their tangible assets (e.g. Manufacturing, Oil & Gas). It is not so useful for companies which depend more on their intangible assets (e.g. Pharma, IT).

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Intrinsic Fair Value Share Price Range for Orica Limited

DCF valuation	: $____
PE Ratio valuation	: $____
EPS Growth Valuation	: $____
Graham Number	: $____
Book Value	: $7.83

Average Fair Value	: $ ____
20% Margin of Safety	: $ ____
Current market price	: $18
PEG Ratio	:    ____

Note - Margin of safety is a principle of investing in which an investor purchases stock only when the market price is significantly below its intrinsic value. This difference allows an investment to be made with minimal downside risk.

Note - Adjusted PE Ratio is calculated as Current market price / 3 year median EPS.