valuing a company

[aeyelifurepe]

Hey guys. I am new to the world of investing and am confused on how to properly value a company. my goal (and tell me if I am incorrect) is to find out the value of a company and if it is undervalued in comparison to the stock price purchase stock in said company. I have been trying to figure out how exactly this should be done and Ive heard so much different info its making my head spin.

so if I take a stock that has a market cap of 1.52 billion and I divide that by the current stock price I get a number of just under $40 million (shares outstanding is 40 million so Im not sure weather to take that into account or not?)

[AntonioVem]

A company is only worth what the shares are bid at.

Think of it this way....all information that might possibly be available to you is available to everyone else as well. Chances are you are not going to find some inefficiency that hasn't already been priced in by the trillions of dollars put through the market every day chasing every penny. In fact no matter how much information you can gather you will never know how much information you don't have. For example...maybe your numbers show that it is 8m$ overvalued...but maybe the teams of researchers at the hedge funds with 100's of billions under management know that they ordered 10% more cardboard boxes than normal for next month and bought it up a month ago driving the price up.

[aqiqieoirz]

The problem with information is that you have no way of knowing the value of what you know....or how much and the value of what you don't know. Google "Efficient Market Hypothesis".

But don't give up. I believe there are ways a retail trader can get ahead. If you want to ramp up your learning watch Tastytrade.com shows and archives. Especially anything with Tom and Tony. There are a tons of stuff for new traders as well. It's all free just check it out and even if you don't trade the way they do you will learn a lot about how the market works.