How can I improve valuation of a company? Are the drivers of valuation (# of outstanding shares x price per share?) if so
1) how do i increase price per share?
- Is this earnings per share x price per earnings ratio? I guess you can increase earning per share by increasing overall earnings (so brainstorm ideas to improve profits?)
-How can i increase price to earning ratio?
2) Is number of outstanding shares, what's been bought in the stock market? How can you increase this?
You are not approaching this correctly. Think about the value of the company, not on the value per share.
The value of the company depends on
1. Profitability Levels (volumes and margins)
2. Growth perspectives
3. Risk associated with business / volatility (e.g. look at busines or project portfolio)
4. Perception gap on the above (i.e., how positively are those perceived by investors). By the way, on this point, you can buy own shares to signal to the market that the stock is undervalued.
With this in mind, you should be able to develop a structure that is specific to the company you are analyzing.
Hi there,
Remember that a value of a company is essentially its projected future cash flows net present valued.
So, you need to increase today's cashflows and/or increase tomorrow's cashflows.
This means you can:
Meaning, you need to grow profits (today and tomorrow)
It's basically a profitability (with growth mixed in)
when you say grow today's and tomorrow's cash flows, do you mean grow current profits and generate new profits for the future?
