Thevaluesrangewidely,dependingonthemetricused,with
the highest value, at least in this case, generated by the
revenue measure and the lowest by the EBITDA measure.
We also ran a regression of EV/sales ratios for beverage
companiesagainsttheirpretaxoperatingmarginsandarrived
at the following result:
Inthis regression, every1% differencein pretaxoperating
marginstranslatesintoadifferenceof0.1328intheEV/sales
ratios.IfweapplythistothedifferencebetweenCoca-Cola’s
pretaxmarginof25.94%andCott’spretaxmarginof8.80%,
usingCoke’srevenueasthescalingmeasure,wearriveatthe
following estimate of brand name value:
The R-squared does indicate that there willbe significant
standard error in this estimate of value.
Issues in Brand Name Valuation
Whilewehavepresentednumerousapproachestoestimating
thevalue of brand names,there aresignificantdifferences
acrossfirmsthatwehavetoaccountforwhenvaluingbrand
name:
- Single versus multiple brands. There are some
companiesthathaveonebrandnamethattheyaffix
to all of their products (IBM, American Express,
McDonald’s),andthereareothercompaniesthatown