Question

how do you determine future performance of the stock price of an S & P company?

Answer 1

There are 500 S&P companies (as per S&P 500). S&P 500 is a stock market index and companies in S&P 500 are Accenture Plc, American Express Co, Boeing Company, Cisco Systems etc.

To determine the future performance of the stock price of an S&P company like Boeing or Cisco we can make use of a mix of quantitative and qualitative analysis.

The quantitative analysis will include an assessment of the company’s outlook for sales and future profitability. There should be a proper and comprehensive assessment of the outlook for the market as well as the company. The outlook for the market will help in computing the possible increase in sales and revenues for the company in future. Also the volatility and predictability of sales outlook should be accounted for. Next future profitability will have to be assessed. The quantitative model and analysis will determine the average level, trend, and volatility of the firm’s profitability, sustainability of the current profitability level, possibility of improvements in market conditions etc.

Qualitative analysis will include assessing the goals and strategies of the company and assessing product-market strategy and investment for the company. There should be an assessment of management’s goals for the firm and each of the product lines in which it chooses to compete. The goals should match with the company’s strategy for each product line. Also an assessment of current value of the company’s investments that have been made to support the firm’s product-market strategy should be made.