discuss the technical analysis and Enterprise Value Ratio of the Vonage.docx
1. Running head: TECHNICAL ANALYSIS 1
Technical Analysis
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March 26, 2017
2. TECHNICAL ANALYSIS 2
Introduction
This paper will discuss the technical analysis and Enterprise Value Ratio of the Vonage .
Technical analysis (TA) helps a man for orchestrating the general market picture while it lays the
best approach to direct based trading. Having a committed approach will be basic; uncommonly
in the midst of its first attempts to develop an individual exchanging style. The inspiration
driving TA is to do esteem gauges. By planning recorded market data of any instrument, a man
can endeavor to imagine how it should trade (Kim, 2015).
Indicators
The following are the commonly used indicators for the technical analysis of the common
stock of Vonage :-
Market Capitalization
The market capitalization of the Vonage is 1.38 billion (Yahoo). It is proportional to the
estimation of an association, and a man requires two bits of information for registering the
gathering's business sector capitalization that is the organization's share fetched and the amount
of shares amazing.
Enterprise Value
EV measures the estimation of the association, which is Vonage in this case, as on a
particular date. It has discovered by rolling out improvements in the market capitalization of the
Vonage . The EV of the Vonage 1785.6 million (Focus). The formula for calculating EV is as
follow:-
EV = Market Capitalization + Total Debt – Total Cash
3. TECHNICAL ANALYSIS 3
EV/EBITDA Ratio
The EV/EBITDA extent is a standard measure than the P/E proportion since it has not
impacted by changes in the capital structure. Consider a circumstance in which an association
raises an incentive back and uses these resources for repaying the credits (Pignataro, 2013). The
EV/EBITDA ratio is an extension of the EV/EBIT ratio. The EV/EBITDA ratio of the
Vonage is 14.43 (Focus).
P/E Ratio
Price/Earnings Ratio is a broadly utilized stock assessment measure. For security, the P/E
ratio has given by partitioning the last sale price by the average estimate for the predefined
monetary day and age. The P/E ratio of the Vonage is 33.26 for the year 2016 (Nasdaq, 2017).
The formula for calculating P/E is as follow:-
P/E = Market Price per Share/ EPS
PEG Ratio
Financial specialists are continually searching for organizations with excellent
development prospects offering at alluring costs. One prominent measurement used to
distinguish such stocks is the PEG proportion - which is essentially the Price Earnings portion
partitioned by the development rate. For this situation, we utilize the anticipated growth rate and
gauge income throughout the following 12 months (Kumar & Mohapatra, 2015). The PEG ratio
of Vonage is 2.62 (Vonage Holdings Corp. PEG Ratio, 2017). The following is the formula for
calculating the PEG ratio:-
PEG Ratio = PE Ratio/ Earning growth rate
4. TECHNICAL ANALYSIS 4
Growth Rate
The growth rate of the Vonage for the year 2017 is 45.86%, and for the year 2018 is
5.36%.
Analysis of EV and EV/EBITDA Ratio
This section will discuss the EV and EV/EBITDA ratio of the Vonage. The Enterprise
value of the Vonage will calculate as follow:-
EV = Market Capitalization + Total Debt – Total Cash
= 1493.026 + 322.302 – 29.679
= 1785.6
The EV/EBITDA ratio of the Vonage can be calculated as follow:-
EV/EBITDA = EV/ (EBIT + Depreciation + Amortization)
= EV/EBITDA
= 1785.6/43.887
= 40.69
Measurement of Overvaluation or Undervaluation
The stock of Vonage has undervalued as per the indicators and the analysis. Money
related authorities mainly use an association's endeavor different to choose if an organization has
thought little of or overstated. The fundamental purpose behind all the cynicism encompassing
Vonage is falling income on the back of declining sales. A wander distinctive is useful for
5. TECHNICAL ANALYSIS 5
transnational examinations since it neglects the turning effects of individual countries' duty
evaluation methodologies. Therefore, the Analysis shows that Vonage is the best buy in the
current state due to the undervaluation but financial soundness.
Conclusion
Recognizing a different to respect an individual stock frequently includes contrasting an
organization's basics with an associate gathering and after that changing the associated
conference standard various to reflect variations between the individual organization and its
companions. On the off chance that the entry on value surpasses the cost of value, the cost will
exceed the book estimation of value; if the arrival on value is lower than the expense of value,
the price will be lower than the book estimate of value.
6. TECHNICAL ANALYSIS 6
References
Vonage Holdings Corp. PEG Ratio. (2017, April 03). Retrieved from Nasdaq:
http://www.nasdaq.com/symbol/vg/peg-ratio
Focus, G. (n.d.). Vonage Holdings Corp . Retrieved from Guru Focus:
http://www.gurufocus.com/term/ev/VG/Enterprise-Value/Vonage-Holdings-Corp
Kim, M. (2015). Half & Half Donation Series Step by Step Beginner to Advanced Stock Trading:
Fundamental Analysis, Basic Technical Analysis. Minjun Kim.
Kumar, N. B., & Mohapatra, S. (2015). The Use of Technical and Fundamental Analysis in the
Stock Market in Emerging and Developed Economies. Emerald Group Publishing.
Nasdaq. (2017, April 03). Vonage Holdings Corp. Analyst PE Estimates. Retrieved from
Nasdaq: http://www.nasdaq.com/symbol/vg/pe-ratio
Pignataro, P. (2013). Financial Modeling and Valuation: A Practical Guide to Investment
Banking and Private Equity. John Wiley & Sons.
Yahoo. (n.d.). Vonage Holdings Corp. Retrieved from Yahoo:
https://in.finance.yahoo.com/quote/VG?ltr=1
