This approach requires an in-depth understanding of companies and their key value drivers. The fundamental approach underlying this methodology includes:
Identifying companies that consistently earn ‘a’ capital return in excess of their cost of capital while finding new opportunities.
Prospects of future growth relative to the price level of a share, resulting in recommendations when there is a strong belief that a stock is undervalued relative to its prospects (vice versa in the case of a sell recommendation).
We also apply various metrics when assessing the valuation of a company such as Price to Earnings (P/E) ratios, Price to Book (P/B) vs Return on Equity (ROE) comparison, Discounted Cash Flows (DCF) and Relative Valuations.
The fair value of a share takes into account all the factors listed above and translates them into a valuation measure based on industry and market comparatives as well as long term historic indicators