Am I Doing Something Wrong?

[Dan Wilson]

#29427

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]

#29445

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.

Rajiv Renganathan, Dan Wilson