Stock Price Analysis

"IS MY STOCK PRICED CORRECTLY?" This is one of the questions our Corporate Finance and Investor Relations consultants are asked most frequently. Others are "Why is my stock priced so low?" and "Is my P/E right?" To answer the question in the context of your price, DeMarche utilizes the same tools used in our Clone Group, P/E Analysis and our Central Value.

Price is one of the most important factors affecting your return and shareholder value. High priced stocks, for instance, perform differently than lower priced stocks in terms of both long-term total return and in terms of periodic returns dependent upon the phase of the market cycle. (Price, for instance, has been shown to be the primary factor causing the small cap effect, not the cap size of a company per se.)

Price along with its siblings, P/E and Value, is also an important component of liquidity. Stocks that are the most mispriced, tend to be less liquid. This affects the discount rate assigned to a company's stock and lowers the marginal P/E and Cost of Equity Capital.