stockAnalyst (version 1.0.1)

terminalValueUsingPE: 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
)

Value

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

Arguments

avg

character vector.

benchmarkPE

number.

En

number.

payout

number.

g

number.

r

number.

Author

MaheshP Kumar,

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.

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)