Performance Evaluation of Stocks’ Valuation Models at MSE
Subject and purpose of work: The main task of this paper is to examine the proximity of valuations generated by different valuation models to stock prices in order to investigate their reliability at Macedonian Stock Exchange (MSE) and to present alternative “scenario” methodology for discounted fre...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Sciendo
2018-06-01
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| Series: | Studia Ekonomiczne i Regionalne |
| Subjects: | |
| Online Access: | https://doi.org/10.2478/ers-2018-0011 |
| _version_ | 1827353191973388288 |
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| author | Ivanovski Zoran Narasanov Zoran Ivanovska Nadica |
| author_facet | Ivanovski Zoran Narasanov Zoran Ivanovska Nadica |
| author_sort | Ivanovski Zoran |
| collection | DOAJ |
| description | Subject and purpose of work: The main task of this paper is to examine the proximity of valuations generated by different valuation models to stock prices in order to investigate their reliability at Macedonian Stock Exchange (MSE) and to present alternative “scenario” methodology for discounted free cash flow to firm valuation. Materials and methods: By using publicly available data from MSE we are calculating stock prices with three stock valuation models: Discounted Free Cash Flow, Dividend Discount and Relative Valuation. Results: The evaluation of performance of three stock valuation models at the MSE identified that model of Price Multiplies (P/E and other profitability ratios) offer reliable stock values determination and lower level of price errors compared with the average stocks market prices. Conclusions: The Discounted Free Cash Flow (DCF) model provides values close to average market prices, while Dividend Discount (DDM) valuation model generally mispriced stocks at MSE. We suggest the use of DCF model combined with relative valuation models for accurate stocks’ values calculation at MSE. |
| first_indexed | 2024-03-08T03:21:30Z |
| format | Article |
| id | doaj.art-45f6defe271b465b8037f57ea52f5895 |
| institution | Directory Open Access Journal |
| issn | 2451-182X |
| language | English |
| last_indexed | 2024-03-08T03:21:30Z |
| publishDate | 2018-06-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Studia Ekonomiczne i Regionalne |
| spelling | doaj.art-45f6defe271b465b8037f57ea52f58952024-02-12T09:13:36ZengSciendoStudia Ekonomiczne i Regionalne2451-182X2018-06-0111272310.2478/ers-2018-0011Performance Evaluation of Stocks’ Valuation Models at MSEIvanovski Zoran0Narasanov Zoran1Ivanovska Nadica2University of Tourism and Management in Skopje, Faculty of Economics,Skopje, MacedoniaWinner Insurance, Vienna Insurance Group,Skopje, MacedoniaCentral Cooperative Bank,Skopje, MacedoniaSubject and purpose of work: The main task of this paper is to examine the proximity of valuations generated by different valuation models to stock prices in order to investigate their reliability at Macedonian Stock Exchange (MSE) and to present alternative “scenario” methodology for discounted free cash flow to firm valuation. Materials and methods: By using publicly available data from MSE we are calculating stock prices with three stock valuation models: Discounted Free Cash Flow, Dividend Discount and Relative Valuation. Results: The evaluation of performance of three stock valuation models at the MSE identified that model of Price Multiplies (P/E and other profitability ratios) offer reliable stock values determination and lower level of price errors compared with the average stocks market prices. Conclusions: The Discounted Free Cash Flow (DCF) model provides values close to average market prices, while Dividend Discount (DDM) valuation model generally mispriced stocks at MSE. We suggest the use of DCF model combined with relative valuation models for accurate stocks’ values calculation at MSE.https://doi.org/10.2478/ers-2018-0011valuationcash flowdiscountingdividendsratios |
| spellingShingle | Ivanovski Zoran Narasanov Zoran Ivanovska Nadica Performance Evaluation of Stocks’ Valuation Models at MSE Studia Ekonomiczne i Regionalne valuation cash flow discounting dividends ratios |
| title | Performance Evaluation of Stocks’ Valuation Models at MSE |
| title_full | Performance Evaluation of Stocks’ Valuation Models at MSE |
| title_fullStr | Performance Evaluation of Stocks’ Valuation Models at MSE |
| title_full_unstemmed | Performance Evaluation of Stocks’ Valuation Models at MSE |
| title_short | Performance Evaluation of Stocks’ Valuation Models at MSE |
| title_sort | performance evaluation of stocks valuation models at mse |
| topic | valuation cash flow discounting dividends ratios |
| url | https://doi.org/10.2478/ers-2018-0011 |
| work_keys_str_mv | AT ivanovskizoran performanceevaluationofstocksvaluationmodelsatmse AT narasanovzoran performanceevaluationofstocksvaluationmodelsatmse AT ivanovskanadica performanceevaluationofstocksvaluationmodelsatmse |