N. 8. 5. FUNDAMENTAL ANALYSIS II. CHAPTER EIGHT. Practical Investment Management Robert A. Strong. Outline. Market Analysis The Major Indexes The Greenspan Model The Equity Risk Premium. Outline. Company Analysis The Greenspan Model Growth At a Reasonable Price (GARP)
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There are several important ways in which analysts can try to get a handle on the status of “the market.”
What do you think of the market?
We can substitute earnings for dividends, and, with a few minor adjustments, apply the basic DDM to indexes.
= 10-year Treasury – S&P 500 earnings
the market is overvalued
the market is undervalued
Insert Figure 8-1 here.
There are several important ways in which analysts can dig deeper into the company.
What do you think of this company?
=estimated annual earnings per share
10-year Treasury rate
the stock is undervalued
the stock is overvalued
Insert Table 8-3 here.
PEG ratio =
price earnings ratio .
annual earnings per share growth rate
Insert Table 8-4 here.
Insert Figure 8-2 here.
Insert Table 8-5 here.
Insert Figure 8-3 here.
Insert Table 8-6 (PepsiCo and Coca-Cola Stock Data) here.