I've summarized the calculation of Valuation that the Vector Vest system uses. This simple formula will let us quickly calculate the fundamental value of a stock.
Whether or not you have heard, used the VectorVest system does not matter in regard to this formula. I just found it interesting as it give a very very rough indication of calculating the supposed value of a stock.
The details are here: http://ozstock.blogspot.com.au/2012/02/valuation-vectorvest-way.html
Another method, the quick Warren Buffet method, can be found here: http://ozstock.blogspot.com.au/2009/07/warren-buffets-1981-formula-for-quick.html
Note these are very quick and rough methods, but they are more sensible than using PE ratio by itself. I have also used what professional analyst use, which is the Discounted Cash Flow DCF. DCF may require a few solid days work to find all the input into the formula, yet in the end, DCF is so sensitive to macro variables, like Borrowing Cost and Beta ratio, that the predicted value is no more accurate than back of envelope calculations like the Buffet or VectorVest method above.
