Category Archives: 4. Company valuation

How to do present value calculation easier?

present value calculation - jcinus

  The Basic of DCF Model (Discount Cash Flow): Present Value Calculation of Future Cash Flows   It is essential to convert future cash flows into today’s value for business valuation. The value of $100 that companies create today is different from $100 expected in five years.   Cash flows after five years may have […]

Business valuation methods – types and practical use

valuation of a company - jcinus

  The methods for valuation of a company   You can classify company valuation methods by several criteria. One of the criteria is to classify them based on whether you value the target company with its own financial status or its comparable companies’ market prices. The former is called the absolute valuation (or intrinsic valuation) […]

What are the roles of company valuation?

investment decision making

Company valuation for investment decision making   Company valuation purpose   Company valuation is an essential task to evaluate the current price level or to determine the initial market price. Let’s look at the formula below to see how important company valuation is.   Return on investment = Pt / P0 P0: Purchase price of […]

PSR Valuation of Deliveroo, Just Eat, and Delivery Hero

How to use PSR with the key fundamental factor to value companies   Key fundamental factors in intrinsic multiples Among the fundamental factors that make up each intrinsic (or theoretical) multiple in relative valuation, the key critical factor is as follows.   Multiples Main Fundamental Factor PER Expected growth rate in EPS EV/EBITDA Reinvestment rate […]

What is PSR? What companies you can apply it to?

Valuation for a growing or venture firm with a deficit or under capital erosion   Why analysts use PSR? PSR is the stock price divided by sales. It is a good multiple to apply to a new technology or a venture firm that has grown in sales but are not making profits yet. You can […]

PBR Valuation of Telecom Companies via Regression

Stock valuation of Telecom companies through PBR regression analysis   Value investors have traditionally chosen stocks with low PBR. It is said that Benjamin Graham, author of “The Intelligent Investor” considered stocks with PBR of less than 2/3 as one of the investment criteria.   One of the ways to use PBR is to compare […]

PBR and Evaluating the Stock Price of Tesla and Toyota

PBR (Price to Book Value Ratio) refers to how many times the market evaluates about the book value of equity for a company. The market will trade it at a higher price when it expects the company to generate more cash flows with equity capital in the future. Suppose company A and company B have […]

EV/EBITDA, Private company valuation – DELL’s MBO

Case: Michael Dell’s MBO of Dell Computer Michael Dell founded Dell Computer in 1984. At his age of 27, in 1992, he grew the company into one of the Fortune 500 companies. In 2004, Michael withdrew from management for a time because of declining performance. However, the board of directors brought him back as CEO […]

EV/EBITDA, Distinction between EV and Equity Value

Enterprise Value vs Equity Value From time to time, the term of enterprise value or equity value is used without distinction. Are they the same meaning? Or different? Let’s look at the following analogy to understand the difference between the two easily.   There are two equally priced flats in London as follows.     […]

Apple’s PER of 36, Over or Undervalued? Use of PEG

Case: Companies in the US home electronics sector   Figure 1: Six companies in the US home electronics industry   The table above shows the market cap and PER of the six companies in the US home electronics sector as of August 27, 2020. Xiaomi has the highest PER while Panasonic has the lowest. Apple, […]

Select your currency