Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
Probabilisticstatements. Some analystscouch their valuations in probabilistic terms to reflect the uncertainty that they feel. ...
ways of valuing companies (multiples and comparables,forexample)thatdonotrequireexplicit assumptions about the future. A few dec ...
believethatinterestratestodayaretoolowandthattheywill goupbyabout1.5percentoverthenextyear.Ifyoubuildthe expectedriseininterestr ...
preciselythanotherssimplybecausethereislessuncertainty about the future. We can value a mature company with relatively few assum ...
Valuationmodelshavebecomemoreandmorecomplexover thepasttwodecadesasaconsequenceoftwodevelopments. Ontheoneside,computersandcalcu ...
A parallel and related question to how much detail there should be in a valuation is the one of how complex a valuationmodelshou ...
words,theassumptionthatpretaxoperatingmargins willstayat 20 percent(abigassumptionthatdoubles thevalueofthecompany)hastocompetew ...
2 APPROACHES TO VALUATION Analystsusea widespectrum ofmodels,rangingfrom the simpleto thesophisticated.Thesemodelsoftenmakevery ...
classroomsandcomeswiththebesttheoreticalcredentials.In thissection,wewilllookatthefoundationsoftheapproach andsomeoftheprelimina ...
Using DCF models is in some sense an act of faith. We believethateveryassethasanintrinsicvalueandwetryto estimate that intrinsic ...
of assets and a business. A businessor a company is an ongoingentitywithassetsthatitalreadyownsandassetsit expectstoinvestinthef ...
One special case of asset-based valuation is liquidation valuation,wherewevalueassetsbased onthepresumption thattheyhavetobesold ...
The second way is to just value the equity stake in the business,andthisiscalledequityvaluation.(SeeFigure1.3.) Thecashflowsafte ...
cashflows.Earningtherisk-adjustedrequiredreturn(costof capitalorequity)isconsideredanormalreturncashflow,but anycashflowsaboveor ...
debt benefits and costs separately from the value of the operating assets. While proponentsofeachapproach liketoclaimthat their ...
thegreaterthevariation,thegreatertherisk.Whenlookingat equity, we tend to use measures of risk based on return variance.Thenextc ...
usethedividendsascashflowsarecalleddividenddiscount models.Abroaderdefinitionofcashflowstoequitywouldbe the cash flows left over ...
followthefirm.Thebiasassociatedwithboththesesources should raise questions about the resulting valuations. Inthis book,we promot ...
contrarianinthesensethatitforcesanalyststolookforthe fundamentals that drive value rather than what market perceptions are. Cons ...
an intrinsic valuation. Extending this analogy to stocks, investorsoftendecidewhetherastockischeaporexpensive bycomparingitspric ...
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