? - Alexandra Yankovskaya recommends.
? Besides, she recommends focusing on the currency flow when evaluating technology companies: “For ordinary companies, it is common to calculate revenues and book prices., and the most popular multiplier is P/E . However, in the case of technology companies, the assessment of currency flows and their dynamics comes to the fore. ".
IT stocks are highly overvalued. How to study them correctly?
Here's what a personal financier should pay attention to when evaluating a tech company., believes Yankovskaya:
? In which markets does the company generate a huge portion of its revenue?;
? What are the rivals and advantages in front of them;
? How much does the company spend on research and development and serious investments;
? Does she cooperate with scientific institutions;
? Does the company have environmental, social dangers or political agenda;
? How the coronavirus infection affected her business;
? When evaluating a tech company, it's also worth realizing, whether she is mature or young. The bottom line is, that for different categories the assessment tools will differ slightly, says Yankovskaya. For instance, technology companies in the expansion stage are not consistently profitable, and with a similar position P / E when evaluating them it is useless to use, like EPS .
For mature companies:
? EPS — earnings per share. The higher the indicator, the higher the market estimates the likely growth of the company's revenue and future income;
? FCFE - free currency flow and its dynamics;
? Projected growth rate of the company.
For young companies:
? Dynamics of revenue growth. Better, to be positive;
If the company makes a loss, then they must also have dynamics. For instance, like Tesla;
? FCFE - free currency flow and dynamics;
? Projected growth rate of the company.
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