Valuing Intangiblesby InvestorGuide Staff
It is difficult, if not impossible, to put an accurate value on intellectual property, developing technology, and any knowledge based asset. How do you know what a patent is truly worth when you don't know what future sales will actually be? How many sales are made because of a trademark or logo - what if you had to put a dollar amount on how much that trademark is worth? Sometimes, these corporate "intangibles" do not even show up on the financial statements. Value investors seek out and purchase stocks when they believe that current share prices do not accurately reflect the value of intangibles and their potential to affect future growth. When the market corrects based off of higher-than-expected earnings and revenue, the stock prices will rise nicely and handsomely increase investor profits.