Valuation of Dyson’s stock, a private company, using PER

Background

In this Excel, you will see the stock of Dyson, a famous British home appliance company, valued using two types of PER. At the same time, you can learn the method of stock valuation for a private company.

To value Dyson, it selected ten companies as comparable firms in the UK stock market. Then, it filtered them one more to extract a proper PER from the group. That process shows how to choose comparable companies when calculating the stock value of a private company, and how to find the average PER from them.

In addition, it considers Dyson as a high-growth company and uses the fundamental factors to calculate the intrinsic PER. The related blogs explain what meaningful result you would get by comparing the intrinsic PER from the fundament figures and the market PER from the peer group. Besides, they teach how to collect and calculate the data in the Excel sheets.

 

The point is that you should use PER in conjunction with fundamentals.

 

 

 

Related Blogs

 

 

Step 1

This sheet contains Dyson’s financial statements for the past five years. It includes the dividend rate, growth rate, and ROE  to estimate the fundamentals. 

 

 

Step 2

This sheet has comparable companies for Dyson, the most critical process in the PER calculation. The first of the two blogs explains in detail how the ten companies were selected, and how the average PER was calculated. 

 

 

Step 3

The third sheet has Dyson’s estimated stock value using the market PER attained from the peer group. The related blog explains how to calculate EPS and the number of shares to use PER correctly.

 

 

Step 4

To find the intrinsic PER, it applies CAPM in the process of calculating the cost of Dyson’s equity capital.

 

 

Step 5

As the most important page in this Excel model, it calculates Dyson’s intrinsic PER and then revalues Dyson’s stock by applying it. The second blog explains the calculation process for that in detail.

 

Understanding the fundamentals reveals, in the case of Dyson, what is appropriate to apply between the intrinsic PER and the market PER

 

 

 

Download: Excel financial model

This template is structured as follows.

  • Consists of 6 sheets including a cover.
  • Uses two types of PER for equity valuation: the market PER obtained from Dyson’s peer group, and the intrinsic PER earned from Dyson’s fundamentals.
  • Use of intrinsic PER for stock valuation of high-growth companies.
  • Evaluate the adequacy of the peer group’s PER by comparing two types of PER.
  • In conclusion, learn how to value the stock of private companies using PER and how to judge market PERs

 

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