Thursday, September 11, 2014

Why using NTA as valuation?



Definition of 'Net Tangible Assets' 

Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. Also known as "net asset value" or "book value".

I do not know why so many analysts or retailers start to use NTA as a valuation-base. I used to heard of PER being popularly used, perhaps ... P/B too. But NTA? Why every tom-dick now talking about the NTA of companies when we are trading/investing? Who started the NTA game?

Even for property counters, they talked about HIGH NTA value ... therefore, it is under-valued. Anything to justify that the stock is under-valued?


This is LionInd ... with very high NTA. Will one consider her as under-valued? Not for me.

I do hope someone will come out and tell newbies that we do not use NTA to place whether a stock is under-valued or not. It is VERY mis-leading. Why those analysts want to mis-lead the trading public, I dont know.

But ... I want to let those newbies to know ... do not follow those NTA valuation blindly. Try to understand what NTA is.

Earnings (EPS) is much more important and should be emphasized.

Just my opinion.

TEH

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