NEW YORK - May 26, 2016 - PRLog -- Business valuation is a fluid discipline with different models to capture nuances of a firm's growth and value characteristics.
The Wall Street Challenger, LLC, a prominent organization for global investment research, announced the launch of Systematic Relative Valuation, a tool that enables investors to understand the potential valuation of their portfolio and targets the most attractive opportunities irrespective of style.
The Systematic Relative Valuation (SRV) combines the proprietary quantitative analysis of a company revenue growth with the stock price change relative to historic norms. The companies are ranked on a 1-7 scale (7 being awarded to the most favorable).
Stocks with a neutral score tend to be less volatile than the stocks of companies that have extreme scores. For companies that have low Systematic Relative Valuation scores, disappointing earnings often result in sharp price declines. This was the case for Microsoft Corporation (MSFT) and Alphabet Inc. (GOOG) that, before earnings were released, had a low SRV score of 2 and 3 respectively. Both companies' earnings disappointed resulting in declining stock prices.
Similarly, companies that have high SRV scores exceed earnings expectations, and often result in strong price increases.
Currently, some of the scores estimated by The Wall Street Challenger are as follows:
| Company | SRV score | Industry |
| Apple Inc. | 5 | Electronic Equipment |
| Amazon.com, Inc. | 3 | Catalog & Mail Order Houses |
| Facebook, Inc. | 5 | Internet Information Providers |
| Alphabet Inc. | 3 | Internet Information Providers |
| Goldman Sachs | 4 | Investment Brokerage |
| Microsoft Corp. | 2 | Business Software & Services |
| Exxon Mobil Corp. | 3 | Major Integrated Oil & Gas |
Poor performance by several key fund holdings could detrimentally affect the overall fund performance more than a fund that holds a balanced number of companies based on growth and value characteristics.
"This new Systematic Relative Valuation score will allow investors to identify at a glance those companies in a portfolio with potential fundamental risks before it has a meaningful impact on their investments," said Gigel Marinescu, President of The Wall Street Challenger. "With an increasingly volatile market, it's clear that many fiduciaries will want to be informed of their portfolios' most attractive opportunities and recognize valuation risks in time to act."
To find out more about Systematic Relative Valuation (SRV) or SPX market valuation, visit http://thewallstreetchallenger.com/Index/srv.
The Wall Street Challenger, LLC is a prominent organization for global investment research. It is dedicated to providing original, impactful economies views, markets forecast, strategies and analysis to identify investment opportunities.
DISCLOSURE: Firm, analyst & analyst family do not have any positions in the mentioned equity. No other conflicts.
Contact
GIGEL MARINESCU
***@thewallstreetchallenger.com
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