valuing a company

[iynxhvbo15]

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?)

[jeannettewl2]

so this would be telling me the company is overvalued by $8 million? or am I getting this way mixed up??
keep in mind I am VERY new at this so thanks in advance for any help you can give me!

[JamiDimarc]

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.

[Jessicadiap]

thank you for the reply!
so I suppose the broader question that im slowly trying to piece together myself is how do I decide if a stock is worth researching? how does one go about deciding that a stock is a good investment other than just guessing? I could easily go to the casino and put it all on black so there must be something that im missing considering so many people put time and effort into the stock market. I feel like theres something in my head that needs to "click" so I can be in the same headspace as successful investors.