8.20  Forecast Price Implications for Investors

In the analysis provided in this chapter the above assessment of IBM’s stock price is significantly higher than current market price (205.37 versus 127.87).  So the question arises based upon this analysis what is the expected future stock price of IBM?

An answer to this question lies in the Implied Expected Return number provided in Valuation Tutor’s calculator.  This is the return predicted from investor in IBM’s stock at the current spot market price.  In the above screen this is 0.11202 and this allows you to forecast where you expect IBM to be trading in 1-year or later time.

Important Disclaimer:  The above projections are computed from the calculated expected returns resulting from a textbook analysis of IBM’s intrinsic value.  Actual realized returns can vary substantially from what is calculated in these examples.