Some of value criteria have to be compared to its sector and company history such as P/E. P/Sales, P/Cash Flow, and P/Book where P is Price.
The better is to compare these criteria to its historical values (I use 5 years but 10 years is better).
P/E and most others should be compared to companies in same sector. P/Sales in a marketing company is different from a supermarket.
P/Book has no meaning for established companies like IBM as the patents and other assets are not included in the book.
Cash Flow is one of the best criteria to evaluate the health of the company (i.e. whether it would bankrupt).
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(c) TonyP4 2012. Written in 2/9/12. Last updated in 2/9/12.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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