Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
The firm is expected to maintain these values in perpetuity. Thefirmpaidout10%ofitsearningsasdividends, resultinginaretentionra ...
Theprice-to-bookratioforthisfirmcanbeestimatedusing the return on equity of 20% as an input: This stock trades atwellabove book ...
willchangeasgrowth changes.In thissection,we usethe fundamentalequations fromthepreceding sectionto tryto address this question. ...
All oftheequitymultiples,otherthanthePEG ratio,ofa high-growth firm increase with the expected extraordinary growthrate—thehighe ...
isadirectresultoftheassumptionoflinearitymadeinthe PEGratio;afterall,iflinearityheld,thePEGratioforafirm with an expectedgrowth ...
TheP/Eratioismuchmoresensitivetochangesinexpected growthrateswheninterestratesarelowthanwhentheyare high.Thereisapossiblelinkbet ...
foronlythreeyears?Whatifitcouldkeephighgrowthgoing for eight years? Table 8.7 summarizes the impact of lengthening the growth pe ...
constant,increasingtheriskofequitywilldecreaseallequity multiples.InTable8.8,weexaminetheeffectofchangingthe beta(andthroughitth ...
risk mayincrease equityvalue muchmorethanincreasing expected growth. Quality of Investments Effect Thefocusonexpectedearningsgro ...
Asthereturnonequityincreases,theequitymultiplesallgo up.Atverylowreturnsonequity,thefirmwillhavetoissue substantialnewequitytosu ...
When the excess returns are negative, thestock trades at below book equity. In fact, when the return on equity is expectedtobeeq ...
InIllustration8.1,weassume thatthefirmmaintainsanet marginof 10 percentandhasasales-to-bookequityratioof2, thusallowingustohavea ...
Whencomparing companieson aprice-to-salesratio basis, wehavetobringintheeffectofnetmargins.Companiesthat havelownetmargins,eithe ...
Variable Ignored Companies That Will Look Cheap Companies That Will Look Expensive Expected growth rate during high-growth perio ...
The key question, then, becomes how best to control for differencesinthesevariableswhendoingrelativevaluation. That is the quest ...
multipleinTable8.12.Notethatthecompanionvariablefor eachmultipleisitalicizedinthetable.Attheminimum,we would expect analysts to ...
mostrecentfourquartersforeachfirm,andthestockpriceis as of December 29, 2005. Company Name P/E Expected Growth Rate Accenture Lt ...
Company Name P/E Expected Growth Rate Keane Inc. 19.46 19.00 Manhattan Assoc. 27.42 11.50 ManTech Int’l A 39.24 17.50 McAfee Inc ...
Regressing theP/Eratio ofeachfirm againsttheexpected growthrate yieldsthefollowingresults(with t-statisticsin brackets below eac ...
RSASecurityisthemostundervaluedcompanyinthesample (with a 59.86% undervaluation) and Ceridian is the most overvalued company in ...
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