Category Archives: 4.5. Relative valuation

EV/EBITDA 12! How should it be interpreted in acquisition valuation?

Acquisition valuation

  EV/EBITDA and Acquisition valuation – Case Analysis for Dell Computer   Why is EV/EBITDA suitable for acquisition valuation?   EV/EBITDA is a relative valuation method suitable for acquisition valuation.   That is because EV considers not only the equity value that the buyer should pay to the original owners but also the debt value […]

3 reasons why EV/EBITDA is useful for M&A valuation.

EV/EBITDA - jcinus

  Understanding and practical interpretation of EV/EBITDA   Knowing the difference between EV (Enterprise Value) and equity value is critically important for the use of EV/EBITDA. Suppose there are Flat A and B with the same price in London as shown in the figure below.   Flat A and B with the same price (to […]

Apple’s PER is 36! Is it high? Or low? Use of PEG

PEG ratio - JCinus

  Evaluating Apple’s 36x PER by the PEG ratio   Determining the stock price level with PER alone could lead to an error.   Suppose that firms A and B have the same business and that both equity capital and profits are the same for the latest fiscal year. All other factors are similar, except […]

How much is Dyson share price? £4million? (Included a Dyson valuation Excel template)

dyson share price - jcinus

  Valuation of Dyson share price by using PER   Dyson is a British technology company founded in 1991 by James Dyson. It designs and manufactures home electric appliances such as vacuum cleaners, air purifiers, hairdryers, bladeless fans, heaters and lighting. It is a global company beyond the UK that has expanded to Asia, Europe, […]

How to use PE ratio to value a private company?

PE Ratio - JCinus

  PE Ratio and Private company stock valuation   Definition of PE Ratio   PE ratio (PER or Price Earnings ratio) is most often used in relative valuation. PE ratio multiple methods are used when an analyst evaluates a listed company’s share price, when a venture capital firm invests in a private company, and when […]

2 things to keep in your mind for the market approach model!

  Market Approach Model, Selection of Comparable companies, and Calculation of Valuation Multiples   The market approach model (relative valuation) is useful when estimating a private company’s market value. The way is to estimate the market value of a target company by referring to a market multiple of listed companies on the stock market similar […]

Why analysts prefer relative valuation multiples?

valuation mutiples - jcinus

  Types and uses of the Relative Valuation Multiples   The relative valuation model is a method of indirectly estimating or judging the market value of a target company by referring to the market price of comparable companies that have similar properties to the target company. The numerator’s market price in the formula below can […]

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 […]

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