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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (16301)2/5/2003 1:37:40 AM
From: Spekulatius  Read Replies (2) of 78666
 
Paul, i never understood the ROE model. Isn't the ROE model really implying a certain earnings growth as well as cash usage? I use the Net present value model (which is pretty much equivalent to a discounted cash flow model) to estimate the net present value of a stock.
My model implies a discount rate (8%) and calculates the NPV of the dividends (which are growing by the same rate then earnings in my model) and the NPV of the stock after 10 years (based on an estimate PE ratio). I use an excel spreadsheet to do so.
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