Atown Essay

264 Words2 Pages
In the aftermath of the recent financial crisis, investors lost fortunes as stocks plummeted. Today, four and a half years later, stocks have not only recovered, but they have reached new record highs. This is clearly seen through the development of indices such as the OMX.C20 and the S&P 500: Exhibit 1 Price&Development&in&S&P&500&and&OMX&C20&& !$2,000!! !$1,800!! !$1,600!! !$1,400!! !$1,200!! !$1,000!! !$800!! !$600!! 1/3/08! !DKK!850!! !DKK!750!! !DKK!650!! !DKK!550!! !DKK!450!! !DKK!350!! !DKK!250!! !DKK!150!! 1/3/09! 1/3/10! 1/3/11! S&P!500! 1/3/12! 1/3/13! 1/3/14! OMX!C20! Source: Bloomberg 2014 Own construction The price of a company’s stock however, is often misinterpreted as its value. In actuality, price is what investors are willing to pay for a stock at a given point in time, whilst the intrinsic value is what the stock is actually worth based on fundamental characteristics such as cash flow, revenue growth, return on invested capital, risk, etc. In light of the recent years’ stock momentum it is an appropriate time to examine if individual stocks are in fact efficiently valued. The scope of this paper allows the valuation of one stock. For this purpose, Rockwool International A/S1 has been chosen because in the stated period, its stock has gone from ‘low to high’ amounting to a threefold increase. Rockwool’s development fits the general stock market, and has thus contributed to the upward movement in stock

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