Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
ThekeydeterminantsoftheP/Eratioaretheexpectedgrowth rateinearningspershare,thecostofequity,andthepayout ratio.Otherthingsremaini ...
We can do a similar analysis to derive the firm value multiples.Thevalueofafirminstablegrowthcanbewritten as: whereFCFF 1 isthee ...
1.5whenthetruereasonmaybethatthelatterhasamuch higher return on equity. Relationship Knowing the fundamentals that determine a m ...
Companion Variable Although the variables that determine a multiple can be extracted from a discounted cash flow model and the r ...
Acomparablefirmisonewithcashflows,growthpotential, andrisksimilartothefirmbeingvalued.Itwouldbeidealif wecouldvalueafirmbylookin ...
value of equityin a firmwith a beta of 1.2, an expected growthrateinearningspershareof 20 percent,andareturn on equity of 40 per ...
potential than the average firm in the industry. If, in the judgmentoftheanalyst,thedifferenceonthemultiplecannot beexplainedbyt ...
not increase proportional to growth, companies with high growth rates will look cheap on a PEG ratio basis. ILLUSTRATION 7.1: Co ...
thelastcolumn.BasedontheaveragePEGratioof2.00for thesectorandtheestimatedgrowthrateforAndresWines, we obtain the following value ...
1.Theoutputfromtheregressiongivesusameasureofhow strong the relationship is between the multiple and the variable being used. Th ...
theR-squared)and includinganyvariables thataccomplish this, the focus of regressions in relative valuations is narrower. Since o ...
Sincethesefirmsdifferonbothriskandexpectedgrowth,a regression of P/E ratios on both variables is presented. Thenumbersinbrackets ...
If the assumption that the relationship between P/E and growthisnotlinear,wecouldeitherrunnonlinearregressions or modify the var ...
Multiple Fundamental Determinants Price-to-sales ratio Expected growth, payout, risk, net margin Itispossible,however,thatthepro ...
relationshipamongandwiththeindependentvariablesused in the regression. Thefactthatmultiplesarenot normallydistributed canpose p ...
thequestionofhowhighanR-squaredhastobetobe meaningful,wewouldfocusonthepredictivepower oftheregression.WhentheR-squareddecreases ...
softwarecompanyrelativetoothersmallsoftwarecompanies, weareassumingthatthemarkethaspricedthesecompanies correctly on average, ev ...
1 Idid thestudy, which includedsell-side equity research reportsfromdifferentinvestmentbanksintheUnitedStates, London,and Asia.A ...
CHAPTER 8 Equity Multiples When investing in a stock, our interests primarily lie in whethertheequityin acompanyisfairlypriced.I ...
three decisions that we have to make that can have consequences for how we measure equity value: 1.Per-shareoraggregateequityval ...
«
88
89
90
91
92
93
94
95
96
97
»
Free download pdf