terminalValueUsingPE: Calculates Terminal Value (TV) of the stock using PEs.

In stockAnalyst: Equity Valuation using Methods of Fundamental Analysis

Calculates Terminal Value (TV) of the stock using PEs.

Description

Terminal Value at time n is calculated by taking benchmark value of trailing PE that is multiplied by EPS of the stock at time n where the final growth stage begins . This also means that Terminal Value of the stock is obtained by using comparable benchmark PE without considering growth or using multistage GGM and thereby incorporating the impact of growth (Jerald E. Pinto, 2020).

Usage

terminalValueUsingPE(
  avg = c("comparable", "GGM"),
  benchmarkPE,
  En,
  payout,
  g,
  r
)

Arguments

avg	character vector.
benchmarkPE	number.
En	number.
payout	number.
g	number.
r	number.

Details

According to information obtained from Jerald E. Pinto (2020), the method terminalValueUsingPE is developed for computing Terminal Value (TV) of the stock using PEs for the values passed to its six arguments. Here, avg is character string, either comparable or GGM , benchmarkPE is benchmark PE Multiple,En is EPS of the stock at time n where the final growth stage begins, payout is payout ratio, g is sustainable growth rate from GGM, and r is required rate of return on the equity.

Value

Input values to six arguments avg, benchmarkPE,En,payout,g, and r.

Author(s)

MaheshP Kumar, [e-mail]

Examples

terminalValueUsingPE("comparable",benchmarkPE=14.3,En=3,payout=0.45,g=0.0715,r=0.10)
terminalValueUsingPE("GGM", benchmarkPE=14.3,En=3,payout=0.45,g=0.0715,r=0.10)

stockAnalyst documentation built on Sept. 13, 2022, 5:07 p.m.