Stock Valuation Models

We offer analysis of four valuation methods: DuPont ROE model, discounted cash flow model, valuation ratios such as P/E, P/B, and net asset value.

DuPont ROE

DuPont ROE model is "a useful technique used to decompose the different drivers of return on equity (ROE)". In a nutshell it breaks down a single ROE value into three components:

1. net profit margin %: Some businesses are by nature high profit margin but small volume, such as a luxury brand, while others are the opposite, eg. WalMart. Thus a trend of this aspect shows whether the business is performing as expected, or has shifted its strategy.
2. asset turn over %: Wholesale business such as WalMart often rely on thin margin but large volume, thus shows a high asset turn over rate.
3. equity multiplier: In other words, debt leverage over equity. Borrowing power is a magnifier, and it works both ways.

Yahoo! API provides a latest ROE value. However, our tool take this one step further by computing the ROE value of each reporting period. By doing so the …