Value Hunter Model

Last modified 17:45, 1 Oct 2012

Value Hunter Model

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The Value Hunter calculator model is based on an analysis methodology that places primary emphasis on earnings growth. This is a strong indicator of the company's sound underlying structure and business processes.

Also important are such attributes as quality of management, and some sort of advantage in the market place, be it a patent, monopoly, or especially unique brand or other significant goodwill.

Items such as these are notoriously difficult to establish exact values for. Hence our approach is to include a Earning Forecast Confidence parameter. Users can raise or lower this amount based on their subjective opinion of the company's intrinsic worth.

Other parameters include the following:

User Defined Parameters

Parameters that can be changed by users to change the selected formula's result include the following:

Earnings Growth Rate

This percentage amount represents the amount of average annual growth anticipated in the period selected in the Years to Forecast setting.

The value is an average of analysts forecasts for EPS growth over 5 years.

Terminal Earnings Growth

This percentage amount represents the growth in earnings after the number of years forecast to infinity.

The default value is 0%, which means that after the number of years forecast, it is assumed that earnings will stay the same from year to year.

Earnings Forecast Confidence

This percentage amount represents the level of confidence that the forecast earnings will eventuate.

The value for each stock is based on the consensus opinion of financial analysts.

Risk Free Rate

This percentage amount represents the risk free rate which is usually taken to be the cash rate or the yield from AAA bonds.

The default value is the current yield from AAA bonds.

Results

Fair Value

The Fair Value calculation results are displayed after the calculator name in the Calculator Selection List.

Users cannot directly alter the resulting Fair Value, however changing the highlighted parameters (yellow background and blue outline) will normally result in a change in results for that calculator and any other calculators that use those parameters.

Results in Table and Graphs

Some of the results for the individual stock can be displayed in tables and graphs in the Results Display area on the right side of the work page.

For a detailed description of these tables and graphs, go to the Results Display topic.

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