Forums General Discussion Am I Doing Something Wrong?

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  • Dan WilsonDan Wilson Member
    Post count: 15

    Hi Guys,

    I’m new to the forum and investing.

    I live in England and I’m currently going through the FTSE 250 to see if I can find any companies that may be undervalued.

    I have just come across Bellway PLC (ticker = BWY) and have the following two questions:

    At first glance this looked like a good company to invest in as the P/E*P/BV was only 7.94, the debt/equity is 0, the current ratio is 4.21 and the BV, EPS & dividends have been steadily increasing over the past 10 years.

    Happy with this I went to the intrinsic value calculator and typed in the numbers which gave me a intrinsic value of approx. £48 per share.

    The question I have is why is the market price of £2,840.00 per share?

    I changed the interest rate to get the intrinsic value of the calculator to match the current market price and the interest rate was -33.75%. Does this mean if I was to invest in this business now I would make a 33.75% loss per year?

    Thank you in advance.

    Dan.

    Ross KingRoss Newbie
    Post count: 3

    Hi Dan

    Market prices in the UK are quoted in pence. This differs from the US. The stock price is currently £28.25.

    The stock looks cheap based on purely the valuation. The balance sheet is strong. What do you believe will keep the business earning high returns on capital?

    Thanks
    Ross

    2 users liked this post.
    Dan Wilson