How to Calculate Price per Share of Common Stock
Price per share of common stock can be calculated by several methods. Many analyst use different methods in order to determine price per share of common stock but they use same techniques which other companies use in an industry. It is a useful tool to know whether to invest in a company or not. It is preferably to check the value calculated from many online calculators available. By this you will not only confirm your value but will also know whether the company’s common stock are valuable or not.
Instructions
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1
Stock quotes
Check out stock quotes in newspapers or related websites. You can visit Yahoo’s finance website in order to find stock quotes. Remember to use close price after exchange hours. In case you are trading during the day, use the last quoted price. -
2
Find the book value
In order to determine the book value, you need to check out a periodical. You can see ‘Value Line Investment Survey’ for this purpose. Then find out the range in which the stock will be traded. You need to see book value, the 3 to 5 year price projection and the historical P/E in order to figure out the range of stock price. By this you will also get to know that the stock is trading below or above its long-term price. -
3
Capitalisation of the company
Next you need to find the capitalisation of the company and you can do this by multiplying the number of shares outstanding with the stock price. Then find the expected future earnings of the company. In order to do this, you need to divide the stock price with the earnings per share. Remember to ignore the stock options to employees. Later determine the estimated next year’s earnings and you can do this by multiplying the expected future earnings with the next year’s price estimate. -
4
Multiply company’s earnings by its historical multiple
First calculate the multiple by multiplying 100 with the expected next year’s earnings increase. Then use this value to multiply with the company’s earnings. -
5
Intrinsic value
Now find out the intrinsic value of a company. In case of capital-intensive stocks, you need to take out liabilities from the assets which will carve out a book value. Then divide it by number of shares and you will get the intrinsic value.
