Investment analysis of the common stocks of selected California banks. - Page 166 |
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! 153
e a r n i n g s p e r s h a r e g iv e s a p r o d u c t w h ich i s th e e s t i m
a ted d iv id e n d s p e r s h a r e , a s shown i n T a b le X X II. j
i
In v e s tm e n t M u l t i p l i e r j
E s tim a te d f u t u r e e a r n i n g s and d iv id e n d s a r e
c o n v e r te d i n t o a n e s tim a te d p r i c e b y m u l t i p l y i n g them
by th e r e c i p r o c a l o f a c a p i t a l i z a t i o n r a t e w h ich i s
c a l l e d a n in v e s tm e n t m u l t i p l i e r * V a r io u s f a c t o r s !
i n f l u e n c e th e p r i c e t h a t a n i n v e s t o r i s w i l l i n g t o p ay
f o r e a c h d o l l a r o f e s tim a te d f u t u r e e a r n i n g s o f an
j i n d i v i d u a l b an k s to c k * Once he s e l e c t s th e h ig h and low |
ij
m u l t i p l i e r , t h e i n v e s t o r i s i n a p o s i t i o n t o c a l c u l a t e
| th e u p p e r and lo w e r v a lu e ra n g e l i m i t s . 1
i
The ra n g e o f in v e s tm e n t v a lu e f o r th e s e l e c t e d
j C a l i f o r n i a b a n k s was com puted by s u b s t i t u t i n g th e
E %
i e s t i m a t e s f o r 1963 i n t h e v a lu e fo rm u la : V = M (D + x * )
I . ^
1 o r in v e s tm e n t v a lu e = m u l t i p l i e r ( d iv id e n d s + .
' T a b le X X III l i s t s , f o r e a c h o f t h e s e l e c t e d
C a l i f o r n i a b a n k s , t h e e a r n i n g s p e r s h a r e a n t i c i p a t e d
; i n 1963» t h e e s t i m a t e d p a y - o u t r a t i o , t h e 1963 e s tim a te d
i d iv id e n d s p e r s h a r e , th e h ig h and low in v e s tm e n t m u l t i -
j
p l i e r , an d th e * v a lu e ra n g e l im i t s * i
A c o m p a riso n o f t h e v a lu e ra n g e w ith th e m a rk e t ,
a s k e d p r i c e i s a s t e p w hich l e a d s t o in v e s tm e n t d e c i s i o n s . 1
i
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| Title | Investment analysis of the common stocks of selected California banks. - Page 166 |
| Repository email | cisadmin@lib.usc.edu |
| Full text | ! 153 e a r n i n g s p e r s h a r e g iv e s a p r o d u c t w h ich i s th e e s t i m a ted d iv id e n d s p e r s h a r e , a s shown i n T a b le X X II. j i In v e s tm e n t M u l t i p l i e r j E s tim a te d f u t u r e e a r n i n g s and d iv id e n d s a r e c o n v e r te d i n t o a n e s tim a te d p r i c e b y m u l t i p l y i n g them by th e r e c i p r o c a l o f a c a p i t a l i z a t i o n r a t e w h ich i s c a l l e d a n in v e s tm e n t m u l t i p l i e r * V a r io u s f a c t o r s ! i n f l u e n c e th e p r i c e t h a t a n i n v e s t o r i s w i l l i n g t o p ay f o r e a c h d o l l a r o f e s tim a te d f u t u r e e a r n i n g s o f an j i n d i v i d u a l b an k s to c k * Once he s e l e c t s th e h ig h and low | ij m u l t i p l i e r , t h e i n v e s t o r i s i n a p o s i t i o n t o c a l c u l a t e | th e u p p e r and lo w e r v a lu e ra n g e l i m i t s . 1 i The ra n g e o f in v e s tm e n t v a lu e f o r th e s e l e c t e d j C a l i f o r n i a b a n k s was com puted by s u b s t i t u t i n g th e E % i e s t i m a t e s f o r 1963 i n t h e v a lu e fo rm u la : V = M (D + x * ) I . ^ 1 o r in v e s tm e n t v a lu e = m u l t i p l i e r ( d iv id e n d s + . ' T a b le X X III l i s t s , f o r e a c h o f t h e s e l e c t e d C a l i f o r n i a b a n k s , t h e e a r n i n g s p e r s h a r e a n t i c i p a t e d ; i n 1963» t h e e s t i m a t e d p a y - o u t r a t i o , t h e 1963 e s tim a te d i d iv id e n d s p e r s h a r e , th e h ig h and low in v e s tm e n t m u l t i - j p l i e r , an d th e * v a lu e ra n g e l im i t s * i A c o m p a riso n o f t h e v a lu e ra n g e w ith th e m a rk e t , a s k e d p r i c e i s a s t e p w hich l e a d s t o in v e s tm e n t d e c i s i o n s . 1 i |
