import { stockValuationTools } from '../tools/stockValuation';
describe('Stock Valuation Tools', () => {
describe('calculate_pe_band', () => {
it('should calculate PE band correctly', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_pe_band');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 150,
eps: 5,
historicalPEs: [20, 22, 25, 23, 21, 19]
});
expect(result.currentPE).toBe(30);
expect(result.symbol).toBe('TEST');
expect(result.recommendation).toBe('Overvalued');
expect(result.minPE).toBe(19);
expect(result.maxPE).toBe(25);
});
it('should handle missing EPS', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_pe_band');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 150,
eps: 0
});
expect(result.currentPE).toBe(0);
});
it('should use default PEs when none provided', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_pe_band');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 100,
eps: 5
});
expect(result.currentPE).toBe(20);
expect(result.historicalPEs).toBeUndefined(); // Should use defaults internally
});
});
describe('calculate_ddm', () => {
it('should calculate DDM valuation correctly', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_ddm');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 100,
dividend: 4,
requiredReturn: 0.1,
growthRate: 0.05
});
expect(result.symbol).toBe('TEST');
expect(result.intrinsicValue).toBe(84); // (4 * 1.05) / (0.1 - 0.05)
expect(result.marginOfSafety).toBeCloseTo(19.05, 2);
expect(result.recommendation).toBe('Hold'); // 19.05% is within the -20% to 20% range for Hold
});
it('should handle zero dividend', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_ddm');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 100,
dividend: 0,
requiredReturn: 0.1,
growthRate: 0.05
});
expect(result.intrinsicValue).toBe(0);
});
it('should validate required return > growth rate', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_ddm');
await expect(tool!.handler({
symbol: 'TEST',
currentPrice: 100,
dividend: 4,
requiredReturn: 0.05,
growthRate: 0.1
})).rejects.toThrow('Required return must be greater than growth rate');
});
});
describe('calculate_dcf', () => {
it('should calculate DCF valuation correctly', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_dcf');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 100,
freeCashFlow: 4000000,
sharesOutstanding: 1000000,
growthRate: 0.08,
discountRate: 0.1
});
expect(result.symbol).toBe('TEST');
expect(result.projections).toHaveLength(5);
expect(result.intrinsicValue).toBeGreaterThan(0);
expect(result.recommendation).toBeDefined();
expect(result.freeCashFlow).toBe(4000000);
});
it('should handle custom projection years', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_dcf');
const result = await tool!.handler({
symbol: 'TEST',
currentPrice: 100,
freeCashFlow: 4000000,
sharesOutstanding: 1000000,
years: 10,
growthRate: 0.08,
discountRate: 0.1
});
expect(result.projections).toHaveLength(10);
});
it('should validate discount rate > terminal growth rate', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_dcf');
await expect(tool!.handler({
symbol: 'TEST',
currentPrice: 100,
freeCashFlow: 4000000,
sharesOutstanding: 1000000,
growthRate: 0.08,
discountRate: 0.03,
terminalGrowthRate: 0.05
})).rejects.toThrow('Discount rate must be greater than terminal growth rate');
});
it('should validate positive free cash flow', async () => {
const tool = stockValuationTools.find(t => t.name === 'calculate_dcf');
await expect(tool!.handler({
symbol: 'TEST',
currentPrice: 100,
freeCashFlow: -1000000,
sharesOutstanding: 1000000,
growthRate: 0.08,
discountRate: 0.1
})).rejects.toThrow('Free cash flow must be positive');
});
});
});
