Future Price Channel® - Calculation

Components included in the calculation of the Future Price Channel®

The probable growth rate of the business and the probable increase in the value of the stock is derived from the intrinsic capacity that a company has to generate profit in the future (the Future Profit Potential). The Future Price Channel® is established on this basis.

The Future Price Channel® incorporates any event that occurs in a company that also affects the value of the stock. The company determines the location and the gradient of the Future Price Channel®. The price fluctuations on the stock market determine the width of the Future Price Channel®.

Evolution of the Key data

The Future Price Channel® takes the growth of the key data points of the business into account.

The key data points that are incorporated into the Future Price Channel® are as follows:

  • earnings per share (EPS)
  • shareholder’s equity per share
  • cash flow
  • dividend
  • revenue
  • profit margin
  • return on equity (ROE )
  • ratio of shareholder’s equity/borrowed capital

The growth in the last 10 years is calculated by using all of these key data points. Each of the key data points also is assigned a weight relative to its importance.

Future Profit Potential

The basis upon which the Future Price Channel® is established is however the Future Profit Potential of the company. When calculating the Future Price Channel®, the macro economic data from the last two business cycles and its influence on the stock market are also taken into account.

Always up-to-date

The Channel is continually adjusted for the newest data related to the economy and the business. That is to say that the Future Price Channel® is not only adjusted for new quarterly data, but it also addresses acquisitions, joint ventures, contracts, orders and other new facts that could influence the future price course.