Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

areso different from the riskand returncharacteristics of operatingassetsthatitmaymakesense(especiallywhencash balances comprise ...

Equity earnings variables. In a conventional accounting statement,we begin with revenues, net outoperatingexpensestoarriveatope ...

extraordinaryitems.Thekeyistocomeupwithameasureof earningsthatiscomparableacrossdifferentfirms.Withthat objective inmind, itisqu ...

flow measures, and they have two choices with equitymultiples.Oneisanapproximatemeasureof cash earnings,obtainedby addingdepreci ...

value paid for each acquisitionand the difference between the market value and book value of the acquiredcompanyasgoodwill;thego ...

Measure of Equity Value Measure of Book Equity Price per share Book value of equity per share Aggregate market value of equity B ...

distributions themselvesare volatileand changeover time. Equitymultiplesarenoexceptiontothisgeneralrule.Inthis section,we examin ...

Table8.3presentssummarystatistics,inJanuary2006,onall threemeasuresoftheprice-earningsratio,startingwith the meanandthestandarde ...

LookingatallthreemeasuresoftheP/Eratio,themeanis consistentlyhigherthanthemedian,reflecting thefact that P/Eratioscanbeveryhighp ...

definedtobetheprice-earningsratiodividedbytheexpected growth rate in earnings per share: Forinstance,afirmwithaPEratioof 20 anda ...

In estimating these PEG ratios, the analyst estimates of growthinearningspershareoverthenextfiveyearsareused inconjunctionwithth ...

FIGURE 8.3 PEG Ratios for High-Growth Firms—U.S. Technology firms in January 2006 Table8.4includesthesummarystatistics,inJanuary ...

All FirmsTechnology Firms Standard error0.17 0.25 Median 1.70 1.66 Skewness 20.11 9.92 Range 234.24 60.43 Minimum 0.00 0.34 Maxi ...

As withthe earningsmultiples,thereisa largenumber of firms with very high price-to-book ratios (exceeding 10). FIGURE8.4PricetoB ...

Arevenue multiple measuresthe value ofthe equityor a businessrelativeto therevenuesthat itgenerates.As with othermultiples,other ...

themultiple cannotbe computed and thus lessbias in the comparison process. 6 Theonlyfirmsthatweloseinthiscomputationarethose whe ...

Themodelscanbestatedintermsofeitheractualdividends (payoutratio)orpotentialdividends(FCFE/Earnings).Allof theequitymultiples,oth ...

where EPS 0 = Earnings per share in year 0 (current year) Payout ratio = Payout ratio in the firstnyears g= Growth rate in the f ...

firm, and the expected growth rate in earnings. The only practicaldifferenceisthatwehavetoestimatetheseinputs twiceforahigh-grow ...

Whilealloftheequationsarebasedonatwo-stagedividend discountmodel,theycanbegeneralizedtotheFCFEmodel byreplacingthepayoutratiowit ...