(C) It is the market crisis that makes us better analysts

The basis of the fundamental analysis lies into the professional financial results estimation. The intrinsic value of a company is a function of three major components: positive relation with the (1) cash-flows, (2) growth expectations and negative relation with (3) required rate of return.

Any time the expectations for a growth of a company does not meet the expectations of the market, especially when those expectations are part of the IPO prospectus, both worldwide and in Bulgaria, the investors recalculate the intrinsic value of the company. What brings a second revaluation impact on the company is the amount of trust the investors have credited to the management of the public company, which appears to be of crucial importance in every contemporary valuation model.

In its gradual development our capital market develops more and more sophisticated sensitivity towards the public companies and sharpens its models’ precision. The public companies should not abandon their forecasts and projections used in the capital hunting process to attract the investors’ attention. Since the capital attracted from the market is attracted due to the expected business development and the consequent return on this development, capitalized in dividends or earnings based share price growth.