How to value companies

Hi everyone, in this article, i will talk about 1 method i use to value a company. The company i will be using is Falcon Energy.

Let's look at its net income for the past 4 years.

Source: SGX

The breakdown in net income in million is as shown below:

• FY2011 - 3.274 (price $0.67)
• FY2012 - 10.429 (price $0.27)
• FY2013 - (2.387) (price $0.42)
• FY2014 - 60.768 (price $0.335)

In FY2011, the net income is about 20 times less than FY2014 results and yet the the price is about 2 times lesser.

If their earnings can sustain at 60 million, their share price be valued more than $0.67. At the current market price of $0.31 is very undervalued.

This is one method you can use to value a company.

Thanks for reading everyone. :)