In one of the last articles on this blog we saw the difference between market value, company value, notional value and intrinsic value. The reader Sumaysigue suggested that we apply the theory on these four concepts to the Spanish engineering company Duro Felguera. It seemed like a very good suggestion to me, so in this article we will see the market, company, theoretical and intrinsic value of Duro Felguera so that you can better understand these four basic concepts of investing in the stock market.
Market value of Duro Felguera
The market value calculation (also called capitalization bursátil) It's very simple. We just have to multiply the number of shares in the company by its price per share.
- Number of shares: 160.000.000
- Price per share: 4,70 euros
With a simple multiplication, we can see that Duro Felguera's market capitalization will be 752 million euros.
- company value of Duro Felguera we must start from the market value or market capitalization that we have just calculated. To this, we must add the company's debt and subtract the money it has in cash and the equivalent items. Both the total debt and the cash and equivalents can be found in the intrinsic value of a company requires a thorough process of both financial and competitive analysis. Fortunately, fellow bloggers Quiet Investment (a value investing blog in Spanish that I take the opportunity to recommend) recently carried out a joint analysis of the Spanish engineering companies Duro Felguera and Técnicas Reunidas. Here are the three articles in which they analyzed and valued these companies:
- Duro Felguera, why don't you raise your price?
- Does the price of Duro Felguera and Técnicas Reunidas reflect its value?
- How much are we paying for Duro Felguera and Técnicas Reunidas?
In the third of these articles they reach the conclusion that the intrinsic value per share of Duro Felguera is at least between 7 and 9,5 euros per share, with a maximum of 12 euros per share. For more information on calculating the intrinsic value of the company, I recommend you read the 3 Quiet Investment articles.
I hope that with this example you can better understand the difference of these four key concepts of value investing.