7c. Stock index simulations

      See also:

 

This exclusive calculator helps you start your own simulations for the stocks you follow, using your own earnings per share projections.

7d. European stocks

Only an extreme example

7e. American stocks

No recent simulation  

7c1. Standard & Poor 500 simulations

with adjusted EPS (considered overstated by 25% because of the firm's pensions liabilities)

Simulation not updated since 06/2003

Pick your scenario

1

2

3 4

A - Estimated Economic Data

. EPS 5 years variation estimate (1)

+ 30 %

+ 42 %

+55% + 67%

. Estimated EPS 2008

34

37

40 44

. Estimated normalized midcycle EPS

(2)

(2)

(2) (2)

. Current or estim. (3) interest rate (bonds)
.  Current or estim. (3) inflation rate

3.5 %
1.5 %

. Primary PER (see PPER  table)

12.5

B - Estimated Economic Values (EEV) calculations

. EPS x primary PER =

425

460

500 550

. Present gross dividend x 5 =

16 x 5 = 80

. EEV (= EPS x primary PER + 5 x dividend)

505

540

580 630

C - Estimated Potential Image Coefficients (EPIC)

. Low EPIC

0,75 (4) (5)

. Structural EPIC

1,20 (4)      

. High EPIC

2,00 (4) (5)

D - Estimated Potential Market Value  (EPMV)

. Low EPMV (= EEV x   low image)

380

405

435 470

. Structural EPMV (= EEV x  struct. image)

605

650

695 755

. High  EPMV (= EEV x  high image)

1010

1080

1160 1260

E - Price / value rating simulation

Current price / Current subjective value rating

990

2 (6)

Footnotes:
(1)  in current money value (not deflated)
(2)  theoretical data that may be used to refine comparisons,  but the market does not take it much into account, often the contrary.
(3)  you may use estimated rates instead of current ones if you expect important forthcoming rate changes
(4)  the more narrow (=with very the least stocks) indexes such as the CAC or DJ,  are a reference for many operations. 

The stocks belonging to this "exclusive" club have a liquidity and notoriety above the whole market.
Thus their prices enjoy a specific quality premium, with images about 10-25 % higher than the whole market's image shown in B table.
(5)  the low image / high image bracket could  be the same in each scenario even if,  more often, images tend to be high when EPS
are rising and low when they are falling.
(6)  1 = very expensive,  2 = expensive,  3 = rather expensive,  4 = average,  5 = rather cheap,  6 = cheap, 7 = very cheap

Make your own simulations with your own EPS projections

 

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