Last week on ValueExpectations.com we provided a few reasons why we like Thermo Fisher Scientific Inc. (TMO); as a supplement to that article we are providing the Intrinsic Value Chart for TMO to give our readers a graphical representation of TMO’s trading range relative to its default intrinsic value.
Using The Applied Finance Group’s (AFG's) Intrinsic Value Chart, you can easily identify under and overvalued securities based on AFG’s default intrinsic value of the firm relative to its trading range, and helps investors to identify good times to buy or sell securities according to what AFG believes the stock is worth.
AFG’s valuation metrics have proven to be successful at identifying investment ideas that out and underperform, and back-tests have consistently shown that AFG creates a significant spread in performance between those companies AFG identifies as overvalued, and companies identified as undervalued.
Today’s Chart of the Day is the default Intrinsic Value Chart for Thermo Fisher Scientific Inc., a company that currently looks undervalued from strictly a valuation standpoint with an AFG Value Score of 95 meaning it ranks in the top 95th percentile of companies in the AFG universe in valuation attractiveness(click to enlarge).
AFG’s Intrinsic Value Chart:
- Identifies entry/exit points.
- Shows how well AFG has tracked the company (accuracy).
- Displays the trading range of the company each year through time (blue bars).
- Displays the end of year closing price (dash on blue bar).
- Displays AFG’s default intrinsic value (red dotted line).
How to read this chart:
- The Blue Bars represent the high and low trading range for a stock for each calendar year.
- The red dotted line represents Applied Finance Group’s historical Intrinsic Value through time.
- When the red line (Intrinsic Value) is above the blue bars (trading range) the company looks to be undervalued.
- When the red line (Intrinsic Value) is below the blue bars (trading range) the company looks to be overvalued.
Below is an example of AFG’s Intrinsic Value Chart and the important things to look for within the chart. There are also two examples of undervalued companies according to AFG’s Intrinsic Value Chart, as well as two overvalued and two fairly valued examples to provide a better understanding of what to look for when analyzing AFG’s Intrinsic Value Chart (click to enlarge).