Download the related iPhone App: Donkey Stocks
This description gives an overview on the principles behind the Donkey Stocks Calculator. It assumes that the stock price is determined by the future earnings. You start with an earnings and the Donkey Stocks Calculator calculates the stock price. The functions are described here. For your convenience there is the free iPhone App Donkey Stocks, but you can do the calculations also by yourself on a calcution sheet.
For a stock price were you are interested in you start with an EPS value for a quarter, typically the last quarter. You can get this information either from the news or from the quarterly report of the company.
The Donkey Stocks Calculator takes 4 times the EPS Quarter and gets a EPS Year. You can change the EPS Quarter when you expect another EPS Year, which means the profit for the actual year.
You enter an annual growth rate in percent according to the news or your expectation. We assume that the future earnings are the main parameter which determines the actual stock price. You can either just assume a future annual earnings or calculate it with a growth rate together with the actual annual earnings.
You insert a period of time for which you want to get the profit forecast. With the period of time together with the growth rate the future earnings are calculated.
The Donkey Stocks Calculator calculates with your inputs the forecast for the profit after your given period of time. Typically 4 to 7 years are taken into account. In our examples we use 6 years which means the annual earnings per share in 6 year is the main parameter for the actual stock price.
Reference Interest Rate
Insert a reference interest rate. At the moment (end year 2014) a good value for USA and Europe is 4.0%. This reference interest rate is something like an interest rate for alternative longterm investments.
The Donkey Stocks Calculator calculates a factor for multiplication of the future profit. You can change the interest rate when you want to change the factor. This means the higher the interest rate for alternative investments the lower the stock prices.
The Donkey Stocks Calculator calculates a stock price with the inserted values. This description willl only show the main principles behind the Donkey Stocks Calculator.
The assumption behind the Donkey Stocks Calculator is that the future profit is the main parameter for the actual stock price. Other parameters may influence a stock price, but they are not taken into account.
For your convenience there is the free iPhone App Donkey Stocks available.
Download free iPhone App: Donkey Stocks
We have Apple, Facebook, Google, Intel and P&G as examples for the Donkey Stocks Calculator on this website. You will find more examples on the free iPhone App Donkey Stocks.