stock valuation presentation

Understanding Valuation: A Comprehensive Guide for Beginners

• August 26, 2024

Valuation is a term that often pops up in discussions about finance, investments, and even in everyday business decisions. Yet, for those new to the concept, it can seem daunting and complex. The good news is once you break it down, understanding valuation becomes much simpler. 

This guide aims to walk you through the basics of valuation, from defining what it is to explore different valuation models. Whether you're a budding investor, a student of finance, or simply curious about how businesses are valued, this guide will provide you with a solid foundation.

What Is Valuation?

Valuation is a fundamental concept in finance that plays a critical role in investment decisions, mergers and acquisitions, and even in legal cases where the value of an asset needs to be determined. 

But why is valuation so important?

Valuation provides a way to measure the true value of an asset, whether it's a stock, a piece of real estate, or an entire business. This value is not always reflected in the market price, which various factors, including investor sentiment, market conditions, and speculation, can influence. Understanding valuation allows you to make more informed decisions, ensuring you're not overpaying for an asset or undervaluing one you own.

The Concept of Valuation: A Closer Look

The concept of valuation is based on the idea that every asset has a value that can be measured, even if it's not immediately obvious. This value is often referred to as "intrinsic value," which represents the actual worth of an asset based on its fundamentals, such as earnings, growth potential, and risk factors.

Intrinsic value contrasts with market value, which an asset currently trades for. The market value can fluctuate wildly due to external factors, but the intrinsic value remains relatively stable, grounded in the asset's actual performance and potential.

Understanding the concept of valuation is crucial because it helps you identify opportunities where the market may have mispriced an asset. For example, if a stock's market price is significantly lower than its intrinsic value, it may be a good investment opportunity. On the other hand, if a stock is trading well above its intrinsic value, it might be overvalued, suggesting that the price could drop in the future.

Different Approaches to Valuation

There are several approaches to valuation, each with its strengths and weaknesses. The choice of which method to use depends on the type of asset being valued, the purpose of the valuation, and the data availability. 

Here are some of the most common valuation models :

Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is one of the most widely used valuation methods. The discount rate used in this calculation reflects the risk associated with the asset's future cash flows. However, it can be less reliable for companies with volatile earnings or uncertain growth prospects.

Steps to perform a DCF analysis:

• Estimate future cash flows: This is typically done by looking at the company's historical performance and making projections based on expected growth rates.
• Choose a discount rate: The discount rate should reflect the riskiness of the cash flows. This is often the company's weighted average cost of capital (WACC).
• Calculate the present value: Discount the estimated future cash flows to their present value using the chosen discount rate.
• Sum the present values: The total present value of all future cash flows gives you the asset's intrinsic value.

Comparable Company Analysis (CCA)

Comparable Company Analysis (CCA) involves comparing the company to similar publicly traded companies. Companies with similar growth prospects and risk profiles should be valued similarly in the same industry.

Steps to perform CCA:

• Identify comparable companies: These should be in the same industry and have similar financial characteristics.
• Calculate relevant multiples: Common multiples used in CCA include the Price-to-Earnings (P/E) ratio, the Price-to-Book (P/B) ratio, and the Enterprise Value-to-EBITDA (EV/EBITDA) multiple.
• Apply the multiples: Apply the average multiples from the comparable companies to the company's financial metrics being valued.
• Adjust for differences: If significant differences exist between the company being valued and its comparables, adjustments should be made to account for these differences.

Precedent Transaction Analysis

Precedent Transaction Analysis involves looking at the prices paid for similar companies in past transactions. This method is used in mergers and acquisitions to estimate what a buyer might pay for a target company.

Steps to perform Precedent Transaction Analysis:

• Identify comparable transactions: Look for recent transactions in the same industry and of similar size.
• Calculate transaction multiples: Similar to CCA, calculate relevant multiples based on the transaction prices.
• Apply the multiples: Use the average multiples from past transactions to estimate the company's value being analyzed.

Valuation Models: Understanding the Numbers

Now that we've covered the different approaches to valuation let's dive deeper into the valuation models that are commonly used.

Asset-Based Valuation

Asset-based valuation is straightforward: it calculates a company's value based on its assets' value. This method is often used for companies being liquidated or where the assets are the most valuable part of the business, such as real estate companies.

Types of asset-based valuation:

• Book Value: This is the value of the company's assets minus liabilities, as recorded on the balance sheet.
• Liquidation Value: This is the amount that could be realized if the company's assets were sold off quickly, often at a discount.

Asset-based valuation is simple and easy to calculate but doesn't account for the company's future earnings potential. Therefore, it's often used in conjunction with other valuation methods.

Earnings Multiplier Model

The Earnings Multiplier Model adjusts the P/E ratio to account for growth rate and risk level differences. This model is useful for valuing companies with high growth potential, as it considers future earnings rather than current ones.

Steps to perform Earnings Multiplier Valuation:

• Calculate the P/E ratio: This is done by dividing the market price per share by the EPS.
• Adjust the multiplier: Adjust the P/E ratio based on the company's expected growth rate and risk profile.
• Apply to earnings: Multiply the adjusted P/E ratio by the company's earnings to estimate its value.

Dividend Discount Model (DDM)

The Dividend Discount Model (DDM) is another popular valuation method, particularly for valuing companies that pay regular dividends. It involves calculating the present value of the company's future dividends.

Steps to perform DDM:

• Estimate future dividends: Project the dividends the company is expected to pay over time.
• Choose a discount rate: This is typically the required rate of return for the investment.
• Calculate the present value: Discount the future dividends back to their present value using the chosen discount rate.

The Importance of Valuation in Investment Decisions

Understanding valuation is crucial for making informed investment decisions. When you know how to value an asset, you can better assess whether it's a good investment. 

Here are a few reasons why valuation is so important:

Identifying Mispriced Assets

One of the main benefits of understanding valuation is that it helps you identify assets mispriced by the market. If an asset's intrinsic value exceeds its market price, it could be a good investment opportunity. Conversely, if an asset is trading above its intrinsic value, it might be overvalued and risky.

Making Better Buy and Sell Decisions

Valuation helps you determine the right time to buy or sell an asset. It might be a good time to buy if an asset is undervalued. If it's overvalued, selling or avoiding buying altogether might be better. 

Assessing Business Performance

For business owners and managers, valuation provides a way to assess the performance of the business. By regularly valuing the business, you can track its growth over time and identify areas where improvements are needed. This can also be useful when negotiating with investors or lenders, as a higher valuation can lead to better terms.

Conclusion: Mastering the Art of Valuation

Valuation is a fundamental skill in finance that can help you make better investment decisions, assess business performance, and identify opportunities in the market. By understanding the concept of valuation and learning how to apply different valuation models, you can gain a deeper insight into the true worth of assets and companies.

While valuation is an important tool, it is also an art. It requires understanding the numbers and a good dose of judgment and experience. Markets are constantly changing, and so are the factors influencing value. 

Transform Your Career with the Postgraduate Financial Analysis Program by Imarticus Learning

With a track record of over 45,000 successful career transitions, Imarticus Learning has crafted an extensive 200+ hour Postgraduate Financial Analysis Program. This program is specifically designed to empower graduates with less than three years of experience in the finance domain, helping them elevate their professional careers. Additionally, the financial analysis course prepares learners for CFA Level 1 roles that are in demand in the industry.

Our financial analysis course offers a unique job assurance, guaranteeing seven interviews with leading finance organizations. Gain expertise in critical areas such as financial statement analysis, modeling, valuation, equity research, and transaction execution, as well as proficiency in Excel and PowerPoint.

Our financial planning and analysis course integrates advanced learning engagement solutions, including simulation tools, allowing learners to immerse themselves in real-world workplace scenarios.

Ready to elevate your finance career? 

Join Imarticus Learning's Postgraduate Financial Analysis Program today and unlock your potential in the finance industry!

Share This Post

Subscribe to our newsletter, get updates and learn from the best, more to explore.

Your Ultimate Guide to Becoming a Chartered Financial Analyst

Your ultimate guide to acca exam dates: stay ahead of the curve, our programs.

Certified Investment Banking Operations Professional

Chief Financial Officer Programme

Global Senior Leadership Programme Specialisation: Chief Finance Officer

Advanced Management Programme In Financial Services And Capital Markets

Senior Leadership Programme In Fintech

Chartered Financial Analyst (CFA)

Certified Management Accountant

Certified Public Accountant

Do you want to boost your career, drop us a message and keep in touch.

Keep In Touch

Newly Launched - AI Presentation Maker

AI PPT Maker

Design Services

Business PPTs

Business Plan

Introduction PPT

Self Introduction

Startup Business Plan

Cyber Security

Digital Marketing

Project Management

Product Management

Artificial Intelligence

Target Market

Communication

Supply Chain

Google Slides

Research Services

All Categories

Stock Valuation PowerPoint Presentation Templates and Google Slides

Stock Valuation Methods Success Statistics Ppt PowerPoint Presentation Ideas Picture

This is a stock valuation methods success statistics ppt powerpoint presentation ideas picture. This is a six stage process. The stages in this process are stock valuation methods, success statistics.

Assessing Stocks In Financial Market Methods Used For Valuation In Equity Research Ppt PowerPoint Presentation Gallery Summary PDF

Presenting this set of slides with name assessing stocks in financial market methods used for valuation in equity research ppt powerpoint presentation gallery summary pdf. This is a seven stage process. The stages in this process are projections, discount rate, present value, sensitivity analysis, sales, marketing, price. This is a completely editable PowerPoint presentation and is available for immediate download. Download now and impress your audience.

Assessing Stocks In Financial Market Relative Valuation Approach For Equity Research Ppt PowerPoint Presentation Ideas Graphics Tutorials PDF

Presenting this set of slides with name assessing stocks in financial market relative valuation approach for equity research ppt powerpoint presentation ideas graphics tutorials pdf. This is a three stage process. The stages in this process are market data, financial data, valuation. This is a completely editable PowerPoint presentation and is available for immediate download. Download now and impress your audience.

Assessing Stocks In Financial Market Valuation Ratio FY19 For Equity Research Ppt PowerPoint Presentation Outline Slide PDF

Presenting this set of slides with name assessing stocks in financial market valuation ratio fy19 for equity research ppt powerpoint presentation outline slide pdf. This is a four stage process. The stages in this process are price to earning, price to book value, rice to sales, price to cash flow. This is a completely editable PowerPoint presentation and is available for immediate download. Download now and impress your audience.

Financial Banking PPT Valuation Summary Along With Stock Price Performance Ideas PDF

The slide provides the target companys valuation summary along with stock price performance 9in comparison with index, key valuation metrics and share price estimates by the brokers for Dec 2021. Deliver and pitch your topic in the best possible manner with this financial banking ppt valuation summary along with stock price performance ideas pdf. Use them to share invaluable insights on target, revenues, valuation metrics and impress your audience. This template can be altered and modified as per your expectations. So, grab it now.

Stock Market Research Report Discounted Cash Flow Method For Company Valuation Formats PDF

The purpose o the following slide is to provide target company valuation using discounted cash flow method , the provided table hoighlights the net operating losses , free cash flow and total enterprise valuation of the target company. Deliver and pitch your topic in the best possible manner with this stock market research report discounted cash flow method for company valuation formats pdf. Use them to share invaluable insights on net operating year, opening balance, current loss, closing balance and impress your audience. This template can be altered and modified as per your expectations. So, grab it now.

Stock Market Research Report Methods Used For Valuation In Equity Research Guidelines PDF

The following slide displays the equity valuation methods such as balance sheet methods, earning multiple methods and discounted cash flow method. Presenting stock market research report methods used for valuation in equity research guidelines pdf to provide visual cues and insights. Share and navigate important information on seven stages that need your due attention. This template can be used to pitch topics like relative valuation approach, discounted cash flow, projections, discount rate, present value, sensitivity analysis, terminal value, adjustments. In addition, this PPT design contains high-resolution images, graphics, etc, that are easily editable and available for immediate download.

Stock Market Research Report Relative Valuation Approach For Equity Research Inspiration PDF

The following slide displays the market data, financial data and valuation of multiple companies of the market. The provided table compares the price, market cap, Sales, EBITDA, earning and P or E ratio. Presenting stock market research report relative valuation approach for equity research inspiration pdf to provide visual cues and insights. Share and navigate important information on one stages that need your due attention. This template can be used to pitch topics like market data, financial data, valuation. In addition, this PPT design contains high-resolution images, graphics, etc, that are easily editable and available for immediate download.

Stock Market Research Report Valuation Ratio FY19 For Equity Research Ppt PowerPoint Presentation Model Background Images PDF

The purpose of the following slide is to analyze the valuation ratios of the organizations. Such as price to earning, price to book value rati, price to sales ratio and price to cash flow ratio. Presenting stock market research report valuation ratio fy19 for equity research ppt powerpoint presentation model background images pdf to provide visual cues and insights. Share and navigate important information on four stages that need your due attention. This template can be used to pitch topics like rice to earning, price to book value, price to sale, price to cash flow. In addition, this PPT design contains high-resolution images, graphics, etc, that are easily editable and available for immediate download.

Convertible Preferred Stock Funding Pitch Deck Return On Convertible Securities Valuation Cap Slides PDF

The slide provides the equity allocation and return on convertible note investment while the investment is raised with valuation cap. Presenting convertible preferred stock funding pitch deck return on convertible securities valuation cap slides pdf to provide visual cues and insights. Share and navigate important information on four stages that need your due attention. This template can be used to pitch topics like return on convertible securities valuation cap. In addtion, this PPT design contains high resolution images, graphics, etc, that are easily editable and available for immediate download.

Valuation Summary Along With Stock Price Performance Formats PDF

The slide provides the target companys valuation summary along with stock price performance 9in comparison with index, key valuation metrics and share price estimates by the brokers for Dec 2021 Deliver an awe inspiring pitch with this creative valuation summary along with stock price performance formats pdf bundle. Topics like stock price performance, valuation of company, precedent transactions valuation can be discussed with this completely editable template. It is available for immediate download depending on the needs and requirements of the user.

Investment Fundraising Pitch Deck From Stock Market Key Valuation Ratio Of The Company Download PDF

The slide provides the key ratios and a brief summary about the relevance of those ratios. Key ratios include return on capital employed, earning per share, price-earning ratio, return on equity, dividend yield etc. Deliver an awe inspiring pitch with this creative investment fundraising pitch deck from stock market key valuation ratio of the company download pdf bundle. Topics like price, equity, measure, industry, efficient can be discussed with this completely editable template. It is available for immediate download depending on the needs and requirements of the user.

Investment Fundraising Pitch Deck From Stock Market Valuation Comparison With Competitors Formats PDF

The slide provides relative valuation of the company comparing to its competitors. It provides comparison on the basis of share price, market capitalization, enterprise value, Price-Earning PE ratio EV or EBITDA ratio. Deliver and pitch your topic in the best possible manner with this investment fundraising pitch deck from stock market valuation comparison with competitors formats pdf. Use them to share invaluable insights on valuation comparison with competitors and impress your audience. This template can be altered and modified as per your expectations. So, grab it now.

Investment Fundraising Pitch Deck From Stock Market Market Valuation Of The Company Guidelines PDF

The slide provides key valuation ratios or stats EBITDA, EBIT, NOPAT and current market valuation of the company as per the discounted cash flow method. Presenting investment fundraising pitch deck from stock market market valuation of the company guidelines pdf to provide visual cues and insights. Share and navigate important information on three stages that need your due attention. This template can be used to pitch topics like financial, stabilization, global expansion, growth, revenue. In addtion, this PPT design contains high resolution images, graphics, etc, that are easily editable and available for immediate download.

Commercial Banking Template Collection Valuation Summary Along With Stock Price Performance Diagrams PDF

The slide provides the target companys valuation summary along with stock price performance 9in comparison with index, key valuation metrics and share price estimates by the brokers for Dec 2021. Deliver and pitch your topic in the best possible manner with this commercial banking template collection valuation summary along with stock price performance diagrams pdf. Use them to share invaluable insights on stock price performance, revenues, target prices and impress your audience. This template can be altered and modified as per your expectations. So, grab it now.

Funding Pitch Book Outline Valuation Summary Along With Stock Price Performance Ideas PDF

The slide provides the target companys valuation summary along with stock price performance 9in comparison with index, key valuation metrics and share price estimates by the brokers for Dec 2021. Deliver an awe inspiring pitch with this creative funding pitch book outline valuation summary along with stock price performance ideas pdf bundle. Topics like price, performance, valuation, target can be discussed with this completely editable template. It is available for immediate download depending on the needs and requirements of the user.

Automotive Spare Parts Warehouse Stock Valuation Summary Guidelines PDF

This slide covers stock compilation value report in companys different warehouses. It includes warehouse name, stock on hand, total cost along with the total retail value of parts.Showcasing this set of slides titled Automotive Spare Parts Warehouse Stock Valuation Summary Guidelines PDF. The topics addressed in these templates are Throttle And Clutch, Total Retail, Warehouse. All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Guide To Develop And Estimate Brand Value Sample Stock Market Valuation Multiples And Recent Transaction Methods Professional PDF

This slide illustrates the examples of both methods namely stock market valuation multiples and recent transaction. Businesses can use these methods for their asset valuation.This modern and well-arranged Guide To Develop And Estimate Brand Value Sample Stock Market Valuation Multiples And Recent Transaction Methods Professional PDF provides lots of creative possibilities. It is very simple to customize and edit with the Powerpoint Software. Just drag and drop your pictures into the shapes. All facets of this template can be edited with Powerpoint no extra software is necessary. Add your own material, put your images in the places assigned for them, adjust the colors, and then you can show your slides to the world, with an animated slide included.

Sample Stock Market Valuation Multiples And Recent Transaction Methods Infographics PDF

This slide illustrates the examples of both methods namely stock market valuation multiples and recent transaction. Businesses can use these methods for their asset valuation.This Sample Stock Market Valuation Multiples And Recent Transaction Methods Infographics PDF is perfect for any presentation, be it in front of clients or colleagues. It is a versatile and stylish solution for organizing your meetings. The product features a modern design for your presentation meetings. The adjustable and customizable slides provide unlimited possibilities for acing up your presentation. Slidegeeks has done all the homework before launching the product for you. So, do not wait, grab the presentation templates today

Sample Stock Market Valuation Multiples And Recent Transaction Methods Brand Value Estimation Guide Information PDF

This slide illustrates the examples of both methods namely stock market valuation multiples and recent transaction. Businesses can use these methods for their asset valuation.Get a simple yet stunning designed Sample Stock Market Valuation Multiples And Recent Transaction Methods Brand Value Estimation Guide Information PDF. It is the best one to establish the tone in your meetings. It is an excellent way to make your presentations highly effective. So, download this PPT today from Slidegeeks and see the positive impacts. Our easy-to-edit Sample Stock Market Valuation Multiples And Recent Transaction Methods Brand Value Estimation Guide Information PDF can be your go-to option for all upcoming conferences and meetings. So, what are you waiting for Grab this template today.

Sample Stock Market Valuation Multiples And Recent Transaction Methods Rules PDF

This slide illustrates the examples of both methods namely stock market valuation multiples and recent transaction. Businesses can use these methods for their asset valuation.Explore a selection of the finest Sample Stock Market Valuation Multiples And Recent Transaction Methods Rules PDF here. With a plethora of professionally designed and pre-made slide templates, you can quickly and easily find the right one for your upcoming presentation. You can use our Sample Stock Market Valuation Multiples And Recent Transaction Methods Rules PDF to effectively convey your message to a wider audience. Slidegeeks has done a lot of research before preparing these presentation templates. The content can be personalized and the slides are highly editable. Grab templates today from Slidegeeks.

Stocks Fundamental Trend Analysis Table Showing Profitability And Valuation Inspiration PDF

This slide represents the table showing the fundamental analysis of the stocks. It includes information related to key financials for four years along with profitability and valuation.Pitch your topic with ease and precision using this Stocks Fundamental Trend Analysis Table Showing Profitability And Valuation Inspiration PDF. This layout presents information on Profitability Valuation, Key Financials, Revenues. It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Comprehensive Guide To Strengthen Brand Equity Sample Stock Market Valuation Multiples Recent Introduction PDF

This slide illustrates the examples of both methods namely stock market valuation multiples and recent transaction. Businesses can use these methods for their asset valuation. Formulating a presentation can take up a lot of effort and time, so the content and message should always be the primary focus. The visuals of the PowerPoint can enhance the presenters message, so our Comprehensive Guide To Strengthen Brand Equity Sample Stock Market Valuation Multiples Recent Introduction PDF was created to help save time. Instead of worrying about the design, the presenter can concentrate on the message while our designers work on creating the ideal templates for whatever situation is needed. Slidegeeks has experts for everything from amazing designs to valuable content, we have put everything into Comprehensive Guide To Strengthen Brand Equity Sample Stock Market Valuation Multiples Recent Introduction PDF

DCF Model Categories To Forecast Stock Valuation Evaluation Portrait Pdf

The purpose of this slide is to showcase the discounted cash flow model to calculate the current discounted value of an investment based on how much cash it will generate in the future Showcasing this set of slides titled DCF Model Categories To Forecast Stock Valuation Evaluation Portrait Pdf The topics addressed in these templates are Intrinsic Value, Assumptions, Key Insights All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Discounted Cash Flow Method To Stock Valuation Evaluation Summary Pdf

The purpose of this slide is to showcase DCF discounted cash flow model to forecast a companys unlevered free cash flow discounted back to the current value which is known as NPV Net Present Value. The given time period includes startup year 2016-2022 terminal year Pitch your topic with ease and precision using this Discounted Cash Flow Method To Stock Valuation Evaluation Summary Pdf This layout presents information on Cash Flow Method, Stock Valuation Evaluation It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Online Stock Valuation Evaluation Icon Introduction Pdf

Showcasing this set of slides titled Online Stock Valuation Evaluation Icon Introduction Pdf The topics addressed in these templates are Online Stock Valuation, Evaluation Icon All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Stock Valuation Comparable Company Analysis Microsoft Pdf

The purpose of this slide is to showcase a methodology that examines the ratios of similar public companies and uses them to calculate the value of another business. The parameters include market data, financial data and valuation Pitch your topic with ease and precision using this Stock Valuation Comparable Company Analysis Microsoft Pdf This layout presents information on Market Data, Financial Data, Company Analysis It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Stock Valuation Evaluation Fundamental Model Microsoft Pdf

The purpose of this slide is to depict the fundamental analysis process of determining a stocks intrinsic value in order to identify long-term investment opportunities in a competitive market. Showcasing this set of slides titled Stock Valuation Evaluation Fundamental Model Microsoft Pdf The topics addressed in these templates are Reported Revenues, Adjusted Income, Adjusted Diluted All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Stock Valuation Evaluation Model Structure Pdf

The purpose of this slide is to outline the criteria to analyze stock valuation through a companys financial metrics by using a variety of valuation multiples. Certain methods include Price Earning ratio, Enterprise Value EBITDA ratio, Enterprise Value Sales ration Pitch your topic with ease and precision using this Stock Valuation Evaluation Model Structure Pdf This layout presents information on Company, Enterprise, Evaluation Model It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Stock Valuation Evaluation Post Corporate Tax Cut Impact Formats Pdf

The purpose of this slide is to showcase stock valuation analysis by considering valuation factors such as revenue growth, PBT growth, PAT projection, PE ratios, market capitalization, etc. Showcasing this set of slides titled Stock Valuation Evaluation Post Corporate Tax Cut Impact Formats Pdf The topics addressed in these templates are Project, Market Cap Projections, Market All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Stock Valuation Evaluation Ratio To Measure Assets Introduction Pdf

The purpose of this slide is to illustrate the measurement or quantity of company assets or financial strength to its market value. Certain formulas to valuate ratios include price to earing ratio, price to book ration, price to cash ratio etc. Pitch your topic with ease and precision using this Stock Valuation Evaluation Ratio To Measure Assets Introduction Pdf This layout presents information on Earnings Ration, Market Cap To Sales Ratio It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Stock Valuation Evaluation Traditional Techniques Guidelines Pdf

This slide depicts the traditional method to analyze stock values by comparing current equity valuations to prior valuations in order to assess current market prospects. Showcasing this set of slides titled Stock Valuation Evaluation Traditional Techniques Guidelines Pdf The topics addressed in these templates are Metric, Cyclically Adjusted, Growth All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Stock Valuation Evaluation Two Stage DDM Method Sample Pdf

The purpose of this slide is to showcase the dividend discount model to analyze stock valuation by showing two stages of growth an initial period of higher growth and subsequent period of stable growth. Pitch your topic with ease and precision using this Stock Valuation Evaluation Two Stage DDM Method Sample Pdf This layout presents information on Stock Valuation, Evaluation Two Stage, DDM Method It is also available for immediate download and adjustment. So, changes can be made in the color, design, graphics or any other component to create a unique layout.

Technical Stock Valuation Evaluation Icon Template Pdf

Showcasing this set of slides titled Technical Stock Valuation Evaluation Icon Template Pdf The topics addressed in these templates are Technical Stock Valuation, Evaluation Icon All the content presented in this PPT design is completely editable. Download it and make adjustments in color, background, font etc. as per your unique business setting.

Stock Valuation Evaluation Ppt Powerpoint Presentation Complete Deck With Slides

Share a great deal of information on the topic by deploying this Stock Valuation Evaluation Ppt Powerpoint Presentation Complete Deck With Slides Support your ideas and thought process with this prefabricated set. It includes a set of thirteen slides, all fully modifiable and editable. Each slide can be restructured and induced with the information and content of your choice. You can add or remove large content boxes as well, to make this PPT slideshow more personalized. Its high-quality graphics and visuals help in presenting a well-coordinated pitch. This PPT template is also a resourceful tool to take visual cues from and implement the best ideas to help your business grow and expand. The main attraction of this well-formulated deck is that everything is editable, giving you the freedom to adjust it to your liking and choice. Changes can be made in the background and theme as well to deliver an outstanding pitch. Therefore, click on the download button now to gain full access to this multifunctional set.

Ratings and Reviews

Most relevant reviews, by shubhangi.

July 8, 2021

by Romika Dhamija

May 26, 2021

June 8, 2021

by Hanisha Kapoor

By bayaraaa.

• You're currently reading page 1

• Search Search Please fill out this field.
• 2 Categories of Valuation Models

Dividend Discount Model (DDM)

Discounted cash flow model (dcf), the comparables model, are absolute or relative valuation models better.

• Why Would a Stock's Price Differ From Its Calculated Value?

Why Are Stock Valuation Models Useful?

• What's the Fastest Stock Valuation Method?

The Bottom Line

• Stock Trading
• Stock Trading Strategy & Education

How to Choose the Best Stock Valuation Method

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

• Valuing a Company: Business Valuation Defined With 6 Methods
• Valuation Analysis
• Financial Statements
• Balance Sheet
• Cash Flow Statement
• 6 Basic Financial Ratios
• 5 Must-Have Metrics for Value Investors
• Earnings Per Share (EPS)
• Price-to-Earnings Ratio (P/E Ratio)
• Price-To-Book Ratio (P/B Ratio)
• Price/Earnings-to-Growth (PEG Ratio)
• Fundamental Analysis
• Absolute Value
• Relative Valuation
• Intrinsic Value of a Stock
• Intrinsic Value vs. Current Market Value
• Equity Valuation: The Comparables Approach
• 4 Basic Elements of Stock Value
• How to Become Your Own Stock Analyst
• Due Diligence in 10 Easy Steps
• Determining the Value of a Preferred Stock
• Qualitative Analysis
• Stock Valuation Methods CURRENT ARTICLE
• Bottom-Up Investing
• Ratio Analysis
• What Book Value Means to Investors
• Liquidation Value
• Market Capitalization
• Discounted Cash Flow (DCF)
• Enterprise Value (EV)
• How to Use Enterprise Value to Compare Companies
• How to Analyze Corporate Profit Margins
• Return on Equity (ROE)
• Decoding DuPont Analysis
• How to Value Private Companies
• Valuing Startup Ventures

When deciding which valuation method to use to value a stock for the first time, it's easy to become overwhelmed by the number of valuation techniques available to investors. There are valuation methods that are fairly straightforward, while others are more involved and complicated. 

Unfortunately, there's no one method that's best suited for every situation. Each stock is different, and each industry or sector has unique characteristics that may require multiple valuation methods . In this article, we'll explore the most common valuation methods and when to use them.

Key Takeaways

• There are several methods for valuing a company or its stock, each with its own strengths and weaknesses.
• Some models try to pin down a company's intrinsic value based on its own financial statements and projects, while others look to relative valuation against peers.
• For companies that pay dividends, a discount model like the Gordon growth model is often simple and fairly reliable — but many companies do not pay dividends.
• Often, a multiples approach may be employed to make comparative evaluations of a company's value in the market against its competitors or broader market.
• When choosing a valuation method, make sure it is appropriate for the firm you're analyzing, and if more than one is suitable use both to arrive at a better estimate.

Two Categories of Valuation Models

Valuation methods typically fall into two main categories: absolute valuation and relative valuation.

Absolute Valuation

Absolute valuation models attempt to find the intrinsic or "true" value of an investment based only on fundamentals. Looking at fundamentals simply means you would only focus on such things as dividends, cash flow, and the growth rate for a single company—and not worry about any other companies. Valuation models that fall into this category include the dividend discount model, discounted cash flow model, residual income model, and asset-based model.

Relative valuation models , in contrast, operate by comparing the company in question to other similar companies. These methods involve calculating multiples and ratios, such as the price-to-earnings (P/E) ratio, and comparing them to the multiples of similar companies. For example, if the P/E of a company is lower than the P/E of a comparable company, the original company might be considered undervalued. Typically, the relative valuation model is a lot easier and quicker to calculate than the absolute valuation model, which is why many investors and analysts begin their analysis with this model.

Let's take a look at some of the more popular valuation methods available to investors, and see when it's appropriate to use each model. 

The dividend discount model (DDM) is one of the most basic of the absolute valuation models. The dividend discount model calculates the "true" value of a firm based on the dividends the company pays its shareholders. The justification for using dividends to value a company is that dividends represent the actual cash flows going to the shareholder, so valuing the present value of these cash flows should give you a value for how much the shares should be worth.

The first step is to determine if the company pays a dividend.

The second step is to determine whether the dividend is stable and predictable since it's not enough for the company to just pay a dividend. The companies that pay stable and predictable dividends are typically mature blue chip companies in well-developed industries. These types of companies are often best suited for the DDM valuation model. For instance, review the dividends and earnings of company XYZ below and determine if the DDM model would be appropriate for the company:

In the above example, the earnings per share (EPS) is consistently growing at an average rate of 5%, and the dividends are also growing at the same rate. The company's dividend is consistent with its earnings trend, which should make it easy to predict dividends for future periods. Also, you should check the payout ratio to make sure the ratio is consistent. In this case, the ratio is 0.125 for all six years, which makes this company an ideal candidate for the dividend discount model. 

The Gordon Growth Model (GGM) is widely used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. It is a popular and straightforward variant of a dividend discount mode (DDM).

What if the company doesn't pay a dividend or its dividend pattern is irregular? In this case, move on to check if the company fits the criteria to use the  discounted cash flow (DCF) model . Instead of looking at dividends, the DCF model uses a firm's discounted future cash flows to value the business. The big advantage of this approach is that it can be used with a wide variety of firms that don't pay dividends, and even for companies that do pay dividends, such as company XYZ in the previous example.

The DCF model has several variations, but the most commonly used form is the Two-Stage DCF model. In this variation, the free cash flows are generally forecasted for five to 10 years, and then a terminal value is calculated to account for all the cash flows beyond the forecasted period. The first requirement for using this model is for the company to have positive and predictable free cash flows. Based on this requirement alone, you will find that many small high-growth companies and non-mature firms will be excluded due to the large capital expenditures these companies typically encounter.

For example, let's take a look at the cash flows of the following firm:

In this snapshot, the firm has produced an increasing positive operating cash flow , which is good. However, you can see by the large amounts of capital expenditures that the company is still investing much of its cash back into the business in order to grow. As a result, the company has negative free cash flows for four of the six years, which makes it extremely difficult or nearly impossible to predict the cash flows for the next five to 10 years.

To use the DCF model most effectively, the target company should generally have stable, positive, and predictable free cash flows. Companies that have the ideal cash flows suited for the DCF model are typically  mature firms that are past the growth stages. 

The last model is sort of a catch-all model that can be used if you are unable to value the company using any of the other models, or if you simply don't want to spend the time crunching the numbers. This model doesn't attempt to find an intrinsic value for the stock like the previous two valuation models. Instead, it compares the stock's price multiples to a benchmark to determine if the stock is relatively undervalued or overvalued. The rationale for this is based on the Law of One Price , which states that two similar assets should sell for similar prices. The intuitive nature of this model is one of the reasons it is so popular.

The reason why the comparables model can be used in almost all circumstances is due to the vast number of multiples that can be used, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. Of these ratios, the P/E ratio is the most commonly used because it focuses on the earnings of the company, which is one of the primary drivers of an investment's value.

When can you use the P/E multiple for a comparison? You can typically use it if the company is publicly traded since you'll need both the stock price and the earnings of the company. Secondly, the company should be generating positive earnings because a comparison using a negative P/E multiple would be meaningless. Lastly, the earnings quality should be strong. That is, earnings should not be too volatile, and the accounting practices used by management should not distort the reported earnings drastically.

These are just some of the main criteria investors should look at when choosing which ratio or multiples to use. If the P/E multiple cannot be used, choose a different ratio, such as the price-to-sales or price-to-cash flow multiples.

Neither type of model is explicitly better than the other. Each has pros and cons. Relative valuation, for example, is often quicker because it relies on comparing key stats for different companies. Absolute valuation can take longer because of the research and calculations involved, but it can offer a more detailed picture of a company's value.

Why Would a Stock's Price Differ From Its Calculated Value?

Some valuation methods, such as the discounted cash flow method, use a company's financial stats to determine its value. Any investor using the method should produce the same result. However, the market price of a stock can differ from its calculated value because investor sentiment is positive and people believe the company will increase profitability, or because of fears of future underperformance.

Investing is all about trying to earn a return from the money you've invested. When it comes to stocks, you want to buy shares at a low price and receive dividends or sell them for a higher price. Stock valuation models can help you determine whether a stock's market price is higher or lower than its true value, helping you know whether it's a good idea to buy or sell shares.

What's the Fastest Stock Valuation Method?

If you're looking to quickly determine the value of a stock, relative valuation methods are typically faster than absolute methods. You can compare the financial stats of two companies to get a sense of their values more quickly than you can do the calculations required by an absolute valuation model.

No single valuation model fits every situation, but by knowing the characteristics of the company, you can select a valuation model that best suits the situation. Additionally, investors are not limited to just using one model. Often, investors will perform several valuations to create a range of possible values or average all of the valuations into one. With stock analysis, sometimes it's not a question of the right tool for the job but rather how many tools you employ to obtain varying insights from the numbers.

The Stern School of Business, New York University. " Dividend Discount Models ."

• Terms of Service
• Editorial Policy
• Privacy Policy

• My presentations

Auth with social network:

Download presentation

We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!

Presentation is loading. Please wait.

(Corporate Valuation) and Stock Valuation

Published by Adi Tedja Modified over 5 years ago

Similar presentations

Presentation on theme: "(Corporate Valuation) and Stock Valuation"— Presentation transcript:

Stocks and Their Valuation

9-1 CHAPTER 9 Stocks and Their Valuation Features of common stock Determining common stock values Preferred stock.

1 Chapter 8 Stocks, Stock Valuation, and Stock Market Equilibrium Stocks, Stock Valuation, and Stock Market Equilibrium.

Stocks and Their Valuation Chapter 10  Features of Common Stock  Determining Common Stock Values  Preferred Stock 10-1.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 8 Stock Valuation.

1 CHAPTER 5 Basic Stock Valuation. 2 Topics in Chapter Features of common stock Determining common stock values Efficient markets Preferred stock.

5 - 1 Copyright © 2002 Harcourt College Publishers.All rights reserved. CHAPTER 5 Basic Stock Valuation Features of common stock Determining common stock.

7 - 1 CHAPTER 7 Stocks and Their Valuation Features of common stock Determining common stock values Efficient markets Preferred stock.

8-1 CHAPTER 8 Stocks and Their Valuation Features of common stock Determining common stock values Efficient markets Preferred stock.

Chapter 8: Stocks and Their Valuation.

Financial Institutions and Markets FIN 304 Dr. Andrew L. H. Parkes Day 8 “How do financial markets work?” 卜安吉.

FIN303 Vicentiu Covrig 1 Stocks and their valuation (chapter 9)

GBUS502 Vicentiu Covrig 1 Stocks and their valuation (chapter 9)

9 - 1 Copyright © 2001 by Harcourt, Inc.All rights reserved. CHAPTER 9 Stocks and Their Valuation Features of common stock Determining common stock values.

(COMMON STOCK ANALYSIS)

8-1 CHAPTER 9 Stocks and Their Valuation Features of common stock Stock valuations Constant dividend growth model The behavior of dividends and their PV.

7 - 1 CHAPTER 7 Valuation Models: Stocks Features of common stock Determining common stock values Security market equilibrium Efficient markets Preferred.

About project

© 2024 SlidePlayer.com Inc. All rights reserved.

IB Pitchbook – Valuation Analysis

Download our free Investment Banking Pitchbook Template

Valuation Analysis Template

The valuation component is generally the most important piece of information for a company that is seeking to pursue an M&A transaction . Both parties in a potential deal perform a thorough valuation analysis to maximize their gains from the transaction. On the acquirer’s side, investment bankers will seek to sell their recommendations by highlighting the impact on valuation following an accretive transaction and an attractive valuation of the target.

For a company looking to sell, investment bankers will seek to show the most attractive valuation possible to the selling company and list any potential buyers to win the deal. The valuation analysis component can vary greatly in length, as well as the level of detail. The following points are some of the common denominators often found in the valuation analysis section of a typical M&A pitchbook.

Download the Template

Transaction rationale.

The transaction rationale is a textual summary of the merits of pursuing a transaction. For M&A, the key points to highlight are any synergies to be gained, accretion/dilution, proforma financial metrics , and any other strategic considerations. For an IPO , the summary should cover key valuation assumptions, timing considerations, key financial sponsors, and high-level rationale for going public. Regardless of the type of corporate finance transaction, preparing a concise transaction summary helps focus attention and communicate the most important considerations for pursuing your bank’s recommendation.

The Football Field Graph

The football field graph is a summary of the company’s valuation that utilizes different methodologies. This is typically an average of the company’s trading range (if public), analyst consensus (if public), comparable multiples valuation, precedent transaction valuation, and the discounted cash flow valuation. The graph will ultimately allow the senior bankers to decide which method to use to achieve the most attractive valuation to display. The ranges for each valuation method derives from the median, best- and worst-case scenarios. Once a blended average valuation is reached, it is best practice to show the valuation in both price format as well as multiple formats, using the multiples that are most appropriate to the industry. Each individual valuation method will be discussed in greater detail in this teaching series.

Analyst Consensus

Relatively speaking, equity research analysts that publish earnings estimates and target prices have the most expertise and the most extensive resources available to study the companies in their coverage universe. Therefore, it is prudent to consider these estimates with the other valuation outputs to form a holistic conclusion. Equity research reports will frequently include tear sheets of analysts’ models, and we can see further granularity in the relevant financial and operating metrics. Investment bankers will often include analyst consensus averages in the forecast periods when building financial models for their client companies.

Sell-Side vs. Buy-Side M&A Pitchbooks

A sell-side M&A pitchbook is typically constructed when a company solicits an investment bank with the intent of selling themselves, looking for potential buyers. A buy-side M&A pitchbook is the inverse scenario, where a company solicits an investment bank with the intent of purchasing another company. In the former situation, the valuation overview will display the client’s valuation, whereas the latter will display the valuations of potential acquisition targets.

In a sell-side M&A pitchbook, it is significantly more important to showcase the client’s valuation in the most attractive light possible. Intuitively, there is an implicit trade-off associated with this deal. As an investment bank, the primary objective of a winning business must be balanced with the capacity to fulfill the company’s objective of selling themselves. An overly rich valuation may win your bank the business, but the ability to materialize the transaction is constrained. An overly conservative valuation may result in the company choosing a different bank to represent them. This is the balancing act that investment bankers constantly perform.

Additional Resources

Thank you for downloading CFI’s free pitchbook template. To keep learning and advancing your career, the following resources will be helpful:

• M&A Considerations and Implications
• Asset Purchase vs Stock Purchase
• Private Company Valuation
• Weighted Average Cost of Capital (WACC)
• See all valuation resources
• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

Common Stock Valuation

Nov 07, 2014

430 likes | 661 Views

6. Common Stock Valuation. Security Analysis: Be Careful Out There. Fundamental analysis is a term for studying a company’s accounting statements and other financial and economic information to estimate the economic value of a company’s stock.

Share Presentation

• growth rate
• discount rate
• constant growth rate
• eps growth rate 17

Presentation Transcript

6 Common Stock Valuation

Security Analysis: Be Careful Out There • Fundamental analysis is a term for studying a company’s accounting statements and other financial and economic information to estimate the economic value of a company’s stock. • The basic idea is to identify “undervalued” stocks to buy and “overvalued” stocks to sell. • In practice however, such stocks may in fact be correctly priced for reasons not immediately apparent to the analyst.

The Dividend Discount Model • The Dividend Discount Model (DDM) is a method to estimate the value of a share of stock by discounting all expected future dividend payments. The basic DDM equation is: • In the DDM equation: • V(0) = the present value of all future dividends • D(t) = the dividend to be paid t years from now • k = the appropriate risk-adjusted discount rate

Example: The Dividend Discount Model • Suppose that a stock will pay three annual dividends of $200 per year, and the appropriate risk-adjusted discount rate, k, is 8%. • In this case, what is the value of the stock today?

The Dividend Discount Model: the Constant Growth Rate Model • Assume that the dividends will grow at a constant growth rate g. The dividend next period (t + 1) is: • For constant dividend growth, the DDM formula becomes:

Example: The Constant Growth Rate Model • Suppose the current dividend is $10, the dividend growth rate is 10%, there will be 20 yearly dividends, and the appropriate discount rate is 8%. • What is the value of the stock, based on the constant growth rate model?

The Dividend Discount Model:the Constant Perpetual Growth Model • Assuming that the dividends will growforever at a constant growth rate g. • For constant perpetual dividend growth, the DDM formula becomes:

Example:Constant Perpetual Growth Model • Think about the electric utility industry. • In 2009, the dividend paid by the utility company, DTE Energy Co. (DTE), was $2.12. • Using D0 =$2.12, k = 5.75%, and g = 2%, calculate an estimated value for DTE. Note: the actual mid-2009 stock price of DTE was $40.29. What are the possible explanations for the difference?

The Dividend Discount Model:Estimating the Growth Rate • The growth rate in dividends (g) can be estimated in a number of ways: • Using the company’s historical average growth rate. • Using an industry median or average growth rate. • Using the sustainable growth rate.

The Sustainable Growth Rate • Return on Equity (ROE) = Net Income / Equity • Payout Ratio = Proportion of earnings paid out as dividends • Retention Ratio = Proportion of earnings retained for investment

Example: Calculating and Using the Sustainable Growth Rate • In 2009, American Electric Power (AEP) had an ROE of 10%, projected earnings per share of $2.90, and a per-share dividend of $1.64. What was AEP’s: • Retention rate? • Sustainable growth rate? • Payout ratio = $1.64 / $2.90 = .566 or 56.6% • So, retention ratio = 1 – .566 = .434 or 43.4% • Therefore, AEP’s sustainable growth rate = .10  .434 = .0434, or 4.34%

Example: Calculating and Using the Sustainable Growth Rate, Cont • What is the value of AEP stock using the perpetual growth model and a discount rate of 5.75%? • The actual late-2009 stock price of AEP was $31.83. • In this case, using the sustainable growth rate to value the stock gives a reasonably poor estimate. • What can we say about g and k in this example?

The Two-Stage Dividend Growth Model • The two-stage dividend growth model assumes that a firm will initially grow at a rate g1 for T years, and thereafter grow at a rate g2 < k during a perpetual second stage of growth. • The Two-Stage Dividend Growth Model formula is:

Using the Two-Stage Dividend Growth Model, I • Although the formula looks complicated, think of it as two parts: • Part 1 is the present value of the first T dividends (it is the same formula we used for the constant growth model). • Part 2 is the present value of all subsequent dividends. • So, suppose MissMolly.com has a current dividend of D(0) = $5, which is expected to “shrink” at the rate g1 - -10% for 5 years, but grow at the rate g2 = 4% forever. • With a discount rate of k = 10%, what is the present value of the stock?

Using the Two-Stage Dividend Growth Model, II • The total value of $46.03 is the sum of a $14.25 present value of the first five dividends, plus a $31.78 present value of all subsequent dividends.

Example: Using the DDM to Value a Firm Experiencing “Supernormal” Growth, I • Chain Reaction, Inc., has been growing at a phenomenal rate of 30% per year. • You believe that this rate will last for only three more years. • Then, you think the rate will drop to 10% per year. • Total dividends just paid were $5 million. • The required rate of return is 20%. • What is the total value of Chain Reaction, Inc.?

Example: Using the DDM to Value a Firm Experiencing “Supernormal” Growth, II • First, calculate the total dividends over the “supernormal” growth period: • Using the long run growth rate, g, the value of all the shares at Time 3 can be calculated as: V(3) = [D(3) x (1 + g)] / (k – g) V(3) = [$10.985 x 1.10] / (0.20 – 0.10) = $120.835

Example: Using the DDM to Value a Firm Experiencing “Supernormal” Growth • Therefore, to determine the present value of the firm today, we need the present value of $120.835 and the present value of the dividends paid in the first 3 years:

Discount Rates for Dividend Discount Models • The discount rate for a stock can be estimated using the capital asset pricing model (CAPM). • We will discuss the CAPM in a later chapter. • However, we can estimate the discount rate for a stock using this formula: Discount rate = time value of money + risk premium = U.S. T-bill rate + (stock beta x stock market risk premium)

Observations on Dividend Discount Models, I Constant Perpetual Growth Model: • Simple to compute • Not usable for firms that do not pay dividends • Not usable when g > k • Is sensitive to the choice of g and k • k and g may be difficult to estimate accurately. • Constant perpetual growth is often an unrealistic assumption.

Observations on Dividend Discount Models, II Two-Stage Dividend Growth Model: • More realistic in that it accounts for two stages of growth • Usable when g > k in the first stage • Not usable for firms that do not pay dividends • Is sensitive to the choice of g and k • k and g may be difficult to estimate accurately.

Residual Income Model (RIM), I • We have valued only companies that pay dividends. • But, there are many companies that do not pay dividends. • What about them? • It turns out that there is an elegant way to value these companies, too. • The model is called the Residual Income Model (RIM). • Major Assumption (known as the Clean Surplus Relationship, or CSR): The change in book value per share is equal to earnings per share minus dividends.

Residual Income Model (RIM), II. • Inputs needed: • Earnings per share at time 0, EPS0 • Book value per share at time 0, B0 • Earnings growth rate, g • Discount rate, k • There are two equivalent formulas for the Residual Income Model: BTW, it turns out that the RIM is mathematically the same as the constant perpetual growth model.

Using the Residual Income Model. • National Beverage Corporation (FIZ) • It is July 1, 2005—shares are selling in the market for $7.98. • Using the RIM: • EPS0=$0.47 • DIV = 0 • B0=$4.271 • g = 0.09 • K = .103 • What can we sayabout the marketprice of FIZ?

The Growth of FIZ • Using the information from the previous slide, what growth rate results in a FIZ price of $7.98?

Price Ratio Analysis, I • Price-earnings ratio (P/E ratio) • Current stock price divided by annual earnings per share (EPS) • Earnings yield • Inverse of the P/E ratio: earnings divided by price (E/P)

Price Ratio Analysis, II • Price-cash flow ratio (P/CF ratio) • Current stock price divided by current cash flow per share • In this context, cash flow is usually taken to be net income plus depreciation. • Most analysts agree that in examining a company’s financial performance, cash flow can be more informative than net income. • Earnings and cash flows that are far from each other may be a signal of poor quality earnings.

Price Ratio Analysis, III • Price-sales ratio (P/S ratio) • Current stock price divided by annual sales per share • A high P/S ratio suggests high sales growth, while a low P/S ratio suggests sluggish sales growth. • Price-book ratio (P/B ratio) • Market value of a company’s common stock divided by its book (accounting) value of equity • A ratio bigger than 1.0 indicates that the firm is creating value for its stockholders.

Price/Earnings Analysis, Intel Corp. Intel Corp (INTC) - Earnings (P/E) Analysis 5-year average P/E ratio 37.30 Current EPS$1.16 EPS growth rate 17.5% Expected stock price = historical P/E ratio  projected EPS $50.84 = 37.30  ($1.16  1.175) Mid-2005 stock price = $26.50

Price/Cash Flow Analysis, Intel Corp. Intel Corp (INTC) - Cash Flow (P/CF) Analysis 5-year average P/CF ratio 19.75 Current CFPS $1.94 CFPS growth rate 13.50% Expected stock price = historical P/CF ratio  projected CFPS $43.49 = 19.75  ($1.94  1.135) Mid-2005 stock price = $26.50

Price/Sales Analysis, Intel Corp. Intel Corp (INTC) - Sales (P/S) Analysis 5-year average P/S ratio 6.77 Current SPS $5.47 SPS growth rate 10.50% Expected stock price = historical P/S ratio  projected SPS $40.92 = 6.77  ($5.47  1.105) Mid-2005 stock price = $26.50

An Analysis of theMcGraw-Hill Company The next few slides contain a financial analysis of the McGraw-Hill Company, using data from the Value Line Investment Survey.

The McGraw-Hill Company Analysis, I

The McGraw-Hill Company Analysis, II

The McGraw-Hill Company Analysis, III. • Based on the CAPM, k = 3.1% + (.80  9%) = 10.3% • Retention ratio = 1 – $.66/$2.65 = .751 • Sustainable g = .751  23% = 17.27% • Because g > k, the constant growth rate model cannot be used. (We would get a value of -$11.10 per share)

The McGraw-Hill Company Analysis (Using the Residual Income Model, I) • Let’s assume that “today” is January 1, 2005, g = 7%, and k = 10.3%. • Using the Value Line Investment Survey (VL), we can fill in column two (VL) of the table below. • We use column one and our growth assumption for column three (CSR) of the table below.

The McGraw-Hill Company Analysis (Using the Residual Income Model, II) • Using the CSR assumption: • Using Value Line numbers for EPS1=$2.65, B1=$11.50B0=$9.45; and using the actual change in book value instead of an estimate of the new book value, (i.e., B1-B0 is = B0 x k) Stock price at the time = $47.04.What can we say?

The McGraw-Hill Company Analysis, IV Quick calculations used: P/CF = P/E  EPS/CFPS P/S = P/E  EPS/SPS

The McGraw-Hill Company Analysis, V

Useful Internet Sites • www.nyssa.org (the New York Society of Security Analysts) • www.aaii.com (the American Association of Individual Investors) • www.eva.com(Economic Value Added) • www.valueline.com (the home of the Value Line Investment Survey) • Websites for the companies analyzed in this chapter: • www.aep.com • www.americanexpress.com • www.pepsico.com • www.starbucks.com • www.sears.com • www.intel.com • www.disney.go.com • www.mcgraw-hill.com

Chapter Review • Security Analysis: Be Careful Out There • The Dividend Discount Model • Constant Dividend Growth Rate Model • Constant Perpetual Growth • Applications of the Constant Perpetual Growth Model • The Sustainable Growth Rate • The Two-Stage Dividend Growth Model • Discount Rates for Dividend Discount Models • Observations on Dividend Discount Models

Chapter Review, II • Residual Income Model (RIM) • Price Ratio Analysis • Price-Earnings Ratios • Price-Cash Flow Ratios • Price-Sales Ratios • Price-Book Ratios • Applications of Price Ratio Analysis • An Analysis of the McGraw-Hill Company

• More by User

Stock valuation

G & Y Services carry out all types of stocktakes, inventories and valuations.

332 views • 3 slides

Hewlett-Packard Common Stock Valuation

Hewlett-Packard Common Stock Valuation. 2. Purpose. Intrinsic enterprise value of the firm is defined as the present value of its future cash flows.The valuation performed as of April 2010.The valuation assumes Hewlett-Packard will continue its operations as a going concern.The valuation is based on publicly-available information and certain assumptions by the author..

828 views • 33 slides

Common Stock Valuation. Our goal in this chapter is to examine the methods commonly used by financial analysts to assess the economic value of common stocks. These methods are grouped into two categories: Dividend discount models Price ratio models Most importantly: Fundamental Analysis.

865 views • 17 slides

The Valuation of Common Stock

Common stock. Ownership claimResidual claim on firm's cash flow. Common stock = ownership claim. Vote to approve auditorsVote to approve financial statementsVote to elect board membersVote changes in articles of incorporationVote by-lawsVote on mergers and acquisitions. Voting. Cumulati

352 views • 33 slides

Stock Valuation

Chapter Eight. Stock Valuation. Chapter Outline. Common Stock Valuation Common Stock Features Preferred Stock Features Stock Market Reporting. Cash Flows for Shareholders 8.1. If you buy a share of stock, you can receive cash in two ways Dividends Selling your shares

439 views • 32 slides

Stock Valuation . 05/03/06. Differences between equity and debt. Unlike bondholders and other credit holders, holders of equity capital are owners of the firm.

254 views • 17 slides

Chapter 8 Common Stock Valuation

Chapter 8 Common Stock Valuation. What is the Intrinsic value and how it is different from the market price How to calculate the intrinsic value. What are the fundamentals of security evaluation.( RRR , time, and size of CFs ) The Discount Cash Flow models to evaluate common stock .

946 views • 44 slides

Common Stock Valuation (chapter 10)

Common Stock Valuation (chapter 10). Fundamental Analysis. Present value approach Capitalization of expected income Intrinsic value based on the discounted value of the expected stream of cash flows Multiple of earnings approach Valuation relative to a financial performance measure

440 views • 25 slides

Stock Valuation. Professor Trainor. Preferred Stock. Preferred stock is a hybrid having some features similar to debt and other features similar to equity. Claim on assets and cash flow senior to common stock As equity security, dividend payments are not tax deductible for the corporation.

448 views • 18 slides

Stock Valuation. Economics 71a: Spring 2007 Mayo 11 Malkiel, 5, 6 (136-144), 8 Lecture notes 4.2. Goals. Dividend valuation model “dividend discount model” Forecasting earnings, dividends, and prices Ratio valuations Malkiel’s “Firm foundations”.

706 views • 50 slides

Common Stock Valuation. Timothy R. Mayes, Ph.D. FIN 3600: Chapter 14. What is Value?. In general, the value of an asset is the price that a willing and able buyer pays to a willing and able seller

430 views • 31 slides

The DDM and Common Stock Valuation

The DDM and Common Stock Valuation. Some quick examples, courtesy of Harcourt The Effect of Evolving Growth Rates Valuation via Operating Cash Flow. Assume beta = 1.2 , k RF = 7 %, and k M = 12 %. What is the required rate of return on the firm’s stock?. Use the SML to calculate k s :.

422 views • 22 slides

Stock Valuation. Understand how stock prices depend on future dividends and dividend growth Be able to compute stock prices using the dividend growth model Understand how corporate directors are elected Understand how stock markets work Understand how stock prices are quoted.

1.34k views • 110 slides

Chapter 9 (8). Stock Valuation. Key Concepts and Skills. Understand how stock prices depend on future dividends and dividend growth Be able to compute stock prices using the dividend growth model Understand how growth opportunities affect stock values Understand valuation comparables

540 views • 27 slides

Valuation of Common Stock

Valuation of Common Stock. Value of an asset: PV of expected future CFs Need to estimate: (1) Stream of expected CFs (2) The required rate of return Valuation for one period:. P 0. P 1 + D 1. R = (P 1 - P 0 + D 1 )/ P 0 P 0 = (P 1 + D 1 ) / (1 + R). Multi-period Valuation

231 views • 10 slides

Stock Valuation. Learning Module. Stock Valuation. Firms obtain their long-term sources of equity financing by issuing common and preferred stock. The payments of the firm to the holders of these securities are in the form of dividends.

325 views • 11 slides

6. Common Stock Valuation. Learning Objectives. Separate yourself from the commoners by having a good Understanding of these security valuation methods: 1. The basic dividend discount model. 2. The two-stage dividend growth model. 3. The residual income model.

564 views • 44 slides

6. Common Stock Valuation. Common Stock Valuation. Our goal in this chapter is to examine the methods commonly used by financial analysts to assess the economic value of common stocks. These methods are grouped into three categories: Dividend discount models Residual Income models

994 views • 44 slides

Stock Valuation. Key Concepts and Skills. Understand how stock prices depend on future dividends and dividend growth Be able to compute stock prices using the dividend growth model Understand how corporate directors are elected Understand how stock markets work

454 views • 33 slides

117 views • 10 slides

182 views • 17 slides

JavaScript seems to be disabled in your browser. For the best experience on our site, be sure to turn on Javascript in your browser.

Exclusive access to over 200,000 completely editable slides.

• Diagram Finder
• Free Templates

• Human Resources
• Project Management
• Timelines & Planning
• Health & Wellness
• Environment
• Cause & Effect
• Executive Summary
• Customer Journey
• 30 60 90 Day Plan
• Social Media
• Escalation Matrix
• Communication
• Go to Market Plan/Strategy
• Recruitment
• Pros and Cons
• Business Plan
• Risk Management
• Roles and Responsibilities
• Mental Health
• ISO Standards
• Process Diagrams
• Puzzle Diagrams
• Organizational Charts
• Arrow Diagrams
• Infographics
• Tree Diagrams
• Matrix Charts
• Stage Diagrams
• Text Boxes & Tables
• Data Driven Charts
• Flow Charts
• Square Puzzle
• Circle Puzzle
• Circular Arrows
• Circle Segments
• Matrix Table
• Pillar Diagrams
• Triangle Puzzle
• Compare Diagrams
• Ladder Diagrams
• Google Slides
• North America Maps
• United States (US) Maps
• Europe Maps
• South America Maps
• Apple Keynote
• People & Objects
• Trending Products
• PowerPoint Templates

Stock Valuation

(4 Editable Slides)

Download Now

This template is part of our Pro Plan.

Gain access to over 200,000 slides with pro plan..

Upgrade Now

Already a Pro customer? Login

Related Products

Trade Finance PowerPoint and Google Slides Template

(13 Editable Slides)

Trade Development PowerPoint and Google Slides Template

Make to Stock

Employee Stock Option Plan

Stock Control

(5 Editable Slides)

Stock Versus Asset Purchase

Stock Trading

Stock Market Vs Cryptocurrency Market

Leverage our Stock Valuation PPT template to describe the method that helps determine the fair value of a company’s share to help investors with informed decision-making. Equity research analysts can use this entirely editable deck to highlight the significance of stock valuation in assisting the investors in predicting the future or potential market price to ascertain the business’s profitability and its future market value. You can also use this set to discuss how this method enables people to understand their risk and identify whether the stock is under or overvalued.

Our PowerPoint template will support your speech and help you create a qualitative, stunning presentation. The well-structured slides will enable your audience to digest the information easily and quickly. So, download this deck right away without any further delay!

Explain the Concept with Power-Packed Designs

• A well-designed listicle depicts the stock valuation methods in a comprehensible manner.
• The methods of valuation of stock based on the dividend discount model have been illustrated through a uniquely designed pattern.
• The approaches to common stock valuation have been given in an easy-to-understand manner.
• A chart presents the stock valuation methods clearly and concisely.

A Plethora of Useful Features

• Changes to the slides can be made without any comprehensive editing skills or external aid.
• You do not need to download the set every time you require them. It is one-time downloadable & lifelong usable.
• Every aspect of the design has been crafted from scratch after meticulous research to keep copyright issues at bay.
• High-resolution and vector-based graphics have been included to provide excellent quality and undisturbed resolution.
• If you face any trouble while using the slides, you can take assistance from our well-trained customer support team.

Create visual presentations that are both enticing and attractive with our PPT. Download them right away!

Create compelling presentations in less time

Newly Launched - AI Presentation Maker

• Customer Favourites

Stock Valuation

AI PPT Maker

Powerpoint Templates

Icon Bundle

Kpi Dashboard

Professional

Business Plans

Swot Analysis

Gantt Chart

Business Proposal

Marketing Plan

Project Management

Business Case

Business Model

Cyber Security

Business PPT

Digital Marketing

Digital Transformation

Human Resources

Product Management

Artificial Intelligence

Company Profile

Acknowledgement PPT

PPT Presentation

Reports Brochures

One Page Pitch

Interview PPT

All Categories

• You're currently reading page 1

Stages // require(['jquery'], function ($) { $(document).ready(function () { //removes paginator if items are less than selected items per page var paginator = $("#limiter :selected").text(); var itemsPerPage = parseInt(paginator); var itemsCount = $(".products.list.items.product-items.sli_container").children().length; if (itemsCount ? ’Stages’ here means the number of divisions or graphic elements in the slide. For example, if you want a 4 piece puzzle slide, you can search for the word ‘puzzles’ and then select 4 ‘Stages’ here. We have categorized all our content according to the number of ‘Stages’ to make it easier for you to refine the results.

Category // require(['jquery'], function ($) { $(document).ready(function () { //removes paginator if items are less than selected items per page var paginator = $("#limiter :selected").text(); var itemsperpage = parseint(paginator); var itemscount = $(".products.list.items.product-items.sli_container").children().length; if (itemscount.

• Business Slides (105)
• Circular (4)
• Cluster (3)
• Complete Decks (3)
• Concepts 1 (2)
• Diagrams (102)

JavaScript seems to be disabled in your browser. For the best experience on our site, be sure to turn on Javascript in your browser.

• My Wish List

• Compare Products
• Presentations

Stock Valuation

You must be logged in to download this file*

item details (4 Editable Slides)

(4 Editable Slides)

Related Products

Use our professionally designed Stock Valuation Powerpoint template to demonstrate the method of evaluating the theoretical values of companies' stocks to help investors make well-informed decisions.

Equity research experts and stock market analysts can leverage these Powerpoint slides to illustrate the various methods or types, benefits, and different models of stock valuation. You can harness the deck to depict the differences between discounted cash flow technique and the relative valuation technique.

Sizing Charts

Glunz & Jensen Holding Statistics

Total valuation.

Glunz & Jensen Holding has a market cap or net worth of DKK 131.13 million. The enterprise value is 207.13 million.

Important Dates

The next estimated earnings date is Tuesday, March 18, 2025.

Share Statistics

Glunz & Jensen Holding has 1.82 million shares outstanding.

Valuation Ratios

Enterprise Valuation

The stock's EV/EBITDA ratio is 34.54, with an EV/FCF ratio of 29.06.

Financial Position

The company has a current ratio of 1.43, with a Debt / Equity ratio of 75.54.

Financial Efficiency

Return on equity (ROE) is -0.38% and return on invested capital (ROIC) is 1.48%.

Stock Price Statistics

The stock price has increased by +3.60% in the last 52 weeks. The beta is 0.12, so Glunz & Jensen Holding's price volatility has been lower than the market average.

Short Selling Information

Income Statement

In the last 12 months, Glunz & Jensen Holding had revenue of DKK 134.22 million and -388,000 in losses.

Balance Sheet

The company has 1.20 million in cash and 77.20 million in debt, giving a net cash position of -76.00 million or -41.73 per share.

In the last 12 months, operating cash flow was 8.48 million and capital expenditures -1.36 million, giving a free cash flow of 7.13 million.

Gross margin is 21.57%, with operating and profit margins of 3.26% and -0.29%.

Dividends & Yields

Glunz & Jensen Holding does not appear to pay any dividends at this time.

Stock Splits

The last stock split was on November 5, 1998. It was a forward split with a ratio of 5.