Stock Valuation Analysis: Nestle S. A's Stock Valuation

Stock valuation is a way that allows investors determine the theoretical financial position and stock of a given company. The methods predict the future market prices and the market prices therefore use the opportunity to generate profit from the market. Stock valuations assists investors make decisions like selling overvalued stocks while purchasing the undervalued ones. The overvalued ones are sold with the anticipation that they would depreciate, while the undervalued stocks expected to rise in value. The paper focuses on Nestle S.A’s stock whose valuation outcomes become fundamental to investors in making investment decisions.

Stock valuations generate the intrinsic stock value depending on the predictions of the business profitability

Gevorkian, (2016) argued that the growth of the company took place during the First and Second World Wars as they went beyond production of infant formula and condensed milk. The company has since acquired various corporations like Findus in 1963, Crosse and Blackwel in 1950, Rowntree Mackintosh in 1988, Libby’s in 1971 and recently Gerber in 2007. Nestlé S.A gets primarily listed on the Six Swiss Exchange and another in Swiss Market Index. Nestlé S.A is listed on the Euronext as well.

Stock valuation

The report conducts at least seven stock valuations to Nestlé S.A and illustrates their importance in determining the future profitability of the stocks in market. Hirschey, (2013) argued that the research performed the valuations using several techniques which would increase an investor’s acumen before making any investment decisions.

Valuation matters

Even if an investor acquires the best stock in the market, but not gain from it more so when it gets bought through a lofty premium. Similarly, it becomes possible to acquire a poorly performing stock but at a very cheap price which makes it a profitable investment. In order to determine whether Nestlé S.A is an invaluable stock it becomes necessary to conduct the valuation to assess its

Net Net Working Capital= Cash+ short term investments + (0.75 X accounts receivable) + (0.5 X inventory)-liabilities

The Net Net working capital method serves as one of the most suitable methods of determining the stock valuation because Nestlé S.A has a decent business model.

Net-Net Working Capital Per Share the latest financial year December 2016

= (Cash And Cash Equivalents + 0.75 (Times) Multiply Accounts Receivable + 0.5 (Times) Multiply Total Inventories - Total Liabilities

- Preferred Stock / Shares Outstanding (Diluted Average)

= (9658.62 + 0.75 (Times) Multiply 0 + 0.5 * 8241.12 - 66030.02

- 0) / 3097.96

= -16.87

Asset reproduction