Equity Valuation

Equity Valuation

We explicitly characterize the risk-adjustments to the fundamentals in an equilibrium setting. We show how the term structure of risk-adjustments depends on both the time-series properties of the free cash flows and the accounting policy.

Author: Peter O. Christensen

Publisher: Now Publishers Inc

ISBN: 9781601982728

Category: Business & Economics

Page: 115

View: 702

Equity Valuation reviews and critically examines the standard approach to equity valuation using a constant risk-adjusted cost of capital and develops a new valuation approach discounting risk-adjusted fundamentals using nominal zero-coupon interest rates. Equity Valuation is organized as follows. Chapter 2 (Risk-adjusted Discount Rates) reviews standard valuation models based on risk-adjusted discount rates. Chapter 3 (Multi-period Asset Pricing Theory and Accounting Relations) examines key results from multi-period asset pricing theory in discrete-time, and shows how equity valuation models can equivalently be based on free cash flows or accrual accounting numbers. Based on these results, the authors derive an accounting-based multi-period equity valuation model presented in Chapter 4 (An Accounting-based Multi-period Equity Valuation Model) with equilibrium risk-adjustments determined by prices of aggregate consumption claims. Chapter 5 (Equity Valuation with HARA Utility) includes a general equilibrium analysis of a setting in which the investors have HARA utility, and aggregate consumption and residual operating income are jointly normally distributed. A set of appendices follows including Appendix B that extends the setting to preferences with external habit formation (which recently has gained popularity in asset pricing theory), and Appendix C, which discusses the relationship between risk-adjusted expected cash flows and certainty equivalents.
Categories: Business & Economics

Equity Valuation Using Multiples

Equity Valuation Using Multiples

Andreas Schreiner examines the role of multiples in equity valuation.

Author: Andreas Schreiner

Publisher: Springer Science & Business Media

ISBN: 9783835095311

Category: Business & Economics

Page: 173

View: 649

Andreas Schreiner examines the role of multiples in equity valuation. He transforms the standard multiples valuation method into a comprehensive framework for using multiples in valuation practice, which corresponds to economic theory and is consistent with the results of a broad empirical study of European and U.S. equity markets.
Categories: Business & Economics

Equity Valuation

Equity Valuation

Filled with real world insights, practical examples and theoretical approaches, the book will examine the strengths and weaknesses of some of the leading valuation approaches, helping readers understand how analysts: estimate cash flows ...

Author: Jan Viebig

Publisher: Wiley

ISBN: 0470031492

Category: Business & Economics

Page: 438

View: 309

Equity Valuation: Models from the Leading Investment Banks is a clear and reader-friendly guide to how today’s leading investment banks analyze firms. Editors Jan Viebig and Thorsten Poddig bring together expertise from UBS, Morgan Stanley, DWS Investment GmbH and Credit Suisse, providing a unique analysis of leading equity valuation models, from the very individuals who use them. Filled with real world insights, practical examples and theoretical approaches, the book will examine the strengths and weaknesses of some of the leading valuation approaches, helping readers understand how analysts: · estimate cash flows · calculate discount rates · adjust for accounting distortions · take uncertainty into consideration Written for investment professionals, corporate managers and anyone interested in developing their understanding of this key area, Equity Valuation: Models from the Leading Investment Banks will arm readers with the latest thinking and depth of knowledge necessary to make the right decisions in their valuation methodologies.
Categories: Business & Economics

Equity Valuation

Equity Valuation

Author: George Athanassakos

Publisher:

ISBN: OCLC:48601409

Category: Cash management

Page: 266

View: 717

Categories: Cash management

Equity Valuation and Analysis

Equity Valuation and Analysis

"Equity Valuation and Analysis closes the gap between the theoretical treatment of equity valuation and the actual practice of valuing a company.

Author: Richard Sloan

Publisher:

ISBN: 107998335X

Category:

Page: 250

View: 375

WHY THIS BOOK?This book spans the void between the abstract theoretical treatment of equity valuation and the practical problem of valuing an actual company using real-world data. We give serious treatment to the underlying theory of financial analysis and valuation, but our main goal is to be able to arrive at a pragmatic answer to the important question, "what is this company really worth?" To answer this question, we adopt a different approach from other textbooks. The key differences can be summarized as follows:1. Our focus is on generating good financial statement forecasts. 2. We provide detailed practical guidance on how to obtain and analyze relevant real-world data. 3. We demystify the mechanics of equity valuation.Our overriding theme is that good forecasts of the future financial statements are the key input to a good valuation. Most other aspects of the valuation process are mechanical and can be programmed into a computer. In fact, this text refers often to eVal, a fancy Excel workbook that provides a template for these many mechanical tasks and is freely available. As with many other textbooks, we discuss topics like business strategy analysis, accounting analysis, financial ratio analysis, and so forth. However, we always do so with a clear view to how these analyses help us to generate better financial statement forecasts. We also provide plenty of advice on where to go to obtain the most relevant raw data. Armed with such a rich source of data, we are able to provide you with plenty of practical examples and limitless opportunities for you to practice doing your own analyses. A final goal of this book is to demystify the valuation process. In the past, we have seen students become lost in a sea of valuation formulas and inconsistent spreadsheet models. For example, students get confused as to whether they should use a DDM, DCF, or RIM valuation formula and whether they need to use the CAPM, APT, or MFM to estimate their WACC (and to how many decimal places). They become obsessed with learning acronyms and formulas but flounder when asked to provide a plausible valuation for an actual company. We demonstrate that these different formulas are easily reconciled and refocus students on developing the best set of financial forecasts to plug into these formulas. This reinforces our main point that the key to good valuations is good forecasts.HOW DOES ALL THIS HELP YOU? The theory of financial analysis and valuation is more compelling when linked to real-world examples. The abstract theory of financial statements, ratios, and valuation formulas can be covered in a few boring lectures. What makes this topic exciting is seeing how an organized approach to studying a real company leaves you so much better informed about the firm's future. Is Apple really worth more than any other public company in the world? The answer is probably yes, once you understand its free cash flow generating ability. Tesla wants to produce and sell hundreds of thousands of cars in the future, but can it generate enough cash from existing sales to fund the production of all these new cars? A careful study of their cash flows shows that they will almost certainly be borrowing lots of money to build all these cars. Financial statements, accounting rules, financial ratios, and valuation models are all pretty dull beasts on their own, but if we can use them to answer questions such as these, we can really bring them to life. By blending the theory of equity analysis with practical application, we feel that students learn both more effectively.The book is supported by a comprehensive set of free online resources, including software, cases, and quizzes, all available at http: //www.lundholmandsloan.co
Categories:

Equity Asset Valuation

Equity Asset Valuation

EQUITY. VALUATION. PROCESS. LEARNING. OUTCOMES. After completing
this chapter, you will be able to do the following: • Define valuation. • Discuss the
uses of valuation models. • Discuss the importance of expectations in the use of ...

Author: John D. Stowe

Publisher: John Wiley & Sons

ISBN: 9780470052822

Category: Business & Economics

Page: 310

View: 548

"Here is an essential tool for the investor: clear, practical, insightful, and concise. This book should have a long, useful life in a professional's library." —Jeffrey P. Davis, CFA, Chief Investment Officer, Lee Munder Capital Group "This book provides a clear, comprehensive overview of equity valuation concepts and methods. It is well suited for finance practitioners who want to strengthen their understanding of equity asset valuation and as a supplemental reading in advanced undergraduate and graduate courses addressing security analysis and business valuation." —Professor Robert Parrino, CFA, PhD, Department of Finance, Red McCombs School of Business, The University of Texas at Austin "CFA Institute has done it again. This will be a 'must' reference book for anyone serious about the nuances of equity investment valuation." —Robert D. Arnott, Chairman, Research Affiliates "Equity Asset Valuation concisely and clearly explains the most widely used approaches to equity evaluation. In addition to thoroughly explaining the implementation of each valuation method, there is sophisticated discussion of the commonsense financial economics and accounting issues underlying the methods." —David Blackwell, Head and RepublicBank/James W. Aston Professor of Finance, Mays Business School, Texas A&M University
Categories: Business & Economics

Valuation of Equity Securities

Valuation of Equity Securities

4.1 History of Equity Valuation Models 4.1.1 Equity Value in Partnerships The
problem of determining the value of an equity position in a business venture goes
back to antiquity (Hecksher 1955, vol. 1). In particular, because transport of
goods ...

Author: Geoffrey Poitras

Publisher: World Scientific

ISBN: 9789814295383

Category: Business & Economics

Page: 753

View: 500

Provides a treatment of academic and practitioner approaches to equity security valuation. This book challenges conventional academic wisdom surrounding the ergodic properties of stochastic processes, guided by historical and philosophical insights. It presents the implications of a general stochastic interpretation of equity security valuation.
Categories: Business & Economics

Applied Equity Valuation

Applied Equity Valuation

Author: T. Daniel Coggin

Publisher: John Wiley & Sons

ISBN: 1883249511

Category: Business & Economics

Page: 242

View: 606

Applied Equity Valuation provides comprehensive coverage of the theory and practice of all aspects of valuation, including security valuation in a complex market, bottom-up approach to small capitalization active management, top down/thematic equity management, implementing an integrated quantitative investment process, applying the DDM, value-based equity strategies, market-neutral portfolio management, enhanced indexing, dynamic style allocation, and exploiting global equity pricing anomalies.
Categories: Business & Economics

Principles of Equity Valuation

Principles of Equity Valuation

Equity. valuation. Multivariate. investment. opportunity. sets. §11-1. In §9-5 of
Chapter 9, we developed an equity pricing formula based on the clean surplus
identity, which, it will be recalled, is an equation that links the increment in the
book ...

Author: Ian Davidson

Publisher: Routledge

ISBN: 9780415696029

Category: Business & Economics

Page: 310

View: 625

The book provides a rigorous introduction to corporate finance and the valuation of equity. The first half of the book covers much of the received theory in these areas such as the relationship between the risk of an equity security and the return one can expect from it, the effects of leverage (that is, the borrowing policies of the firm) on the return one can expect from the firm’s shares and the role that dividends, operating cash flows and accounting earnings play in the valuation of equity. The second half of the book is more advanced and deals with the important role that "real options" (that is, as yet unexploited investment opportunities) play in the valuation of equity.
Categories: Business & Economics

Equity Valuation

Equity Valuation

Author: David F. Hawkins

Publisher: Financial Executives Res Found

ISBN: STANFORD:20500291038

Category: Business & Economics

Page: 196

View: 517

Categories: Business & Economics

Equity Valuation and Portfolio Management

Equity Valuation and Portfolio Management

This high replenishment follows because the G factor in FV is measured relative
to economic book value. Business growth increases book value, so
replenishment will be measured 94 EQUITY VALUATION AND PORTFOLIO
MANAGEMENT.

Author: Frank J. Fabozzi

Publisher: John Wiley & Sons

ISBN: 9781118156551

Category: Business & Economics

Page: 576

View: 349

A detailed look at equity valuation and portfolio management Equity valuation is a method of valuing stock prices using fundamental analysis to determine the worth of the business and discover investment opportunities. In Equity Valuation and Portfolio Management Frank J. Fabozzi and Harry M. Markowitz explain the process of equity valuation, provide the necessary mathematical background, and discuss classic and new portfolio strategies for investment managers. Divided into two comprehensive parts, this reliable resource focuses on valuation and portfolio strategies related to equities. Discusses both fundamental and new techniques for valuation and strategies Fabozzi and Markowitz are experts in the fields of investment management and economics Includes end of chapter bullet point summaries, key chapter take-aways, and study questions Filled with in-depth insights and practical advice, Equity Valuation and Portfolio Management will put you in a better position to excel at this challenging endeavor.
Categories: Business & Economics

Accounting Information and Equity Valuation

Accounting Information and Equity Valuation

In the absence of formal models explaining how equity value should be related to
reported accounting data, researchers have relied on economic intuition and
valuation theories drawn from other disciplines (finance and economics) in order
to ...

Author: Guochang Zhang

Publisher: Springer Science & Business Media

ISBN: 9781461481607

Category: Business & Economics

Page: 233

View: 572

The purpose of this book is to offer a more systematic and structured treatment of the research on accounting‐based valuation, with a primary focus on recent theoretical developments and the resulting empirical analyses that recognize the role of accounting information in making managerial decisions. Since its inception, valuation research in accounting has evolved primarily along an “empirically driven” path. In the absence of models constructed specifically to explain this topic, researchers have relied on economic intuition and theories from other disciplines (mainly finance and economics) as a basis for designing empirical analyses and interpreting findings. Although this literature has shed important light on the usefulness of accounting information in capital markets, it is obvious that the lack of a rigorous theoretical framework has hindered the establishment of a systematic and well‐structured literature and made it difficult to probe valuation issues in depth. More recently, however, progress has been made on the theoretical front. The two most prominent frameworks are (i) the “linear information dynamic approach” and (ii) the “real options‐based approach” which recognizes managerial uses of accounting information in the pursuit of value generation. This volume devotes its initial chapters to an evaluation of the models using the linear dynamic approach, and then provides a synthesis of the theoretical studies that adopt the real options approach and the empirical works which draw on them. The book also makes an attempt to revisit and critique existing empirical research (value-relevance and earnings-response studies) within the real options-based framework. It is hoped that the book can heighten interest in integrating theoretical and empirical research in this field, and play a role in helping this literature develop into a more structured and cohesive body of work. Value is of ultimate concern to economic decision-makers, and valuation theory should serve as a platform for studying other accounting topics. The book ends with a call for increased links of other areas of accounting research to valuation theory.
Categories: Business & Economics

Equity Valuation Science Art or Craft

Equity Valuation  Science  Art  or Craft

IPE Magazine (October): www.ipe.com/investment/investing-in/global-equities/
valuations-emerging-from-the-wings/10015442.article. O'Neill, Jim, Anna
Stupnytska, and James Wrisdale. 2011. “Linking GDP Growth and Equity Returns
.

Author: Frank J. Fabozzi

Publisher: CFA Institute Research Foundation

ISBN: 9781944960346

Category: Business & Economics

Page: 136

View: 157

The price at which a stock is traded in the market reflects the ability of the firm to generate cash flow and the risks associated with generating the expected future cash flows. The authors point to the limits of widely used valuation techniques. The most important of these limits is the inability to forecast cash flows and to determine the appropriate discount rate. Another important limit is the inability to determine absolute value. Widely used valuation techniques such as market multiples - the price-to-earnings ratio, firm value multiples or a use of multiple ratios, for example - capture only relative value, that is, the value of a firm's stocks related to the value of comparable firms (assuming that comparable firms can be identified). The study underlines additional problems when it comes to valuing IPOs and private equity: Both are sensitive to the timing of the offer, suffer from information asymmetry, and are more subject to behavioral elements than is the case for shares of listed firms. In the case of IPOs in particular, the authors discuss how communication strategies and media hype play an important role in the IPO valuation/pricing process.
Categories: Business & Economics

Equity Valuation Risk and Investment

Equity Valuation  Risk  and Investment

With the basic analytical framework complete, we finally come to the moral of this
chapter:The basic valuation modelmust beplaced inthecontext ofvalueeroding or
valueenhancing possibilities from corporate combinations. The corollary is that ...

Author: Peter C. Stimes

Publisher: John Wiley & Sons

ISBN: 9781118160756

Category: Business & Economics

Page: 304

View: 115

Author Peter Stimes’s analysis of the investment process has long been inspired by some of the best minds in the world of finance, yet some of the ways in which he approaches this discipline are truly unique. In Equity Valuation, Risk, and Investment, Stimes shares his extensive expertise with you and reveals how practitioners can integrate and apply both the theory and quantitative analysis found in finance to the day-to-day decisions they must make with regard to important investment issues.
Categories: Business & Economics

Using Investor Relations to Maximize Equity Valuation

Using Investor Relations to Maximize Equity Valuation

Thomas Ryan, Chad Jacobs. Seve EI'OIII DGIIIIGI'Y IO DItIIOQUC Each of the
three parts of. ljllll I Using Investor Relations to Maximize Equity Valuation: PART
SEVEN Dialogue.

Author: Thomas Ryan

Publisher: John Wiley & Sons

ISBN: 9780471708520

Category: Business & Economics

Page: 256

View: 376

A practical guide to proactive investor relations (IR) Investor relations (IR) has traditionally been an administrative function within corporate communications, responsible for disseminating public information and answering investor and media questions. Using Investor Relations to Maximize Equity Valuation challenges this approach, by arguing that IR has been underutilized and then illustrating how it should be elevated to lead a strategic communications effort to preserve or enhance corporate value and lower a company's cost of capital. Divided into four comprehensive parts, this book clearly describes capital markets strategies and tactical operations that these former, senior-level equity analysts and portfolio managers employ. Chad A. Jacobs (Westport, CT) and Thomas M. Ryan (Westport, CT) are the cofounders and co-CEOs of Integrated Corporate Relations.
Categories: Business & Economics

Equity Asset Valuation

Equity Asset Valuation

This book is an excellent primer on the art of valuation." —Pamela Peterson Drake, PhD, CFA, Chandler/Universal Eminent Professor of Finance, James Madison University "Valuation is a bridge between stories and numbers.

Author: Jerald E. Pinto

Publisher: John Wiley & Sons

ISBN: 9781119104643

Category: Business & Economics

Page: 624

View: 962

Navigate equity investments and asset valuation with confidence Equity Asset Valuation, Third Edition blends theory and practice to paint an accurate, informative picture of the equity asset world. The most comprehensive resource on the market, this text supplements your studies for the third step in the three-level CFA certification program by integrating both accounting and finance concepts to explore a collection of valuation models and challenge you to determine which models are most appropriate for certain companies and circumstances. Detailed learning outcome statements help you navigate your way through the content, which covers a wide range of topics, including how an analyst approaches the equity valuation process, the basic DDM, the derivation of the required rate of return within the context of Markowitz and Sharpe's modern portfolio theory, and more. Equity investments encompass the buying and holding of shares of stock in the anticipation of collecting income from dividends and capital gains. Determining which shares will be profitable is key, and an array of valuation techniques is applied on today's market to decide which stocks are ripe for investment and which are best left out of your portfolio. Access the most comprehensive equity asset valuation text on the market Leverage detailed learning outcome statements that focus your attention on key concepts, and guide you in applying the material accurately and effectively Explore a wide range of essential topics, such as the free cash flow approach, valuation using Graham and Dodd type concepts of earning power, associated market multiples, and residual income models Improve your study efforts by leveraging the text during your CFA certification program prep Equity Asset Valuation, Third Edition is a comprehensive, updated text that guides you through the information you need to know to fully understand the general analysis of equity investments.
Categories: Business & Economics

Valuation of Unlisted Direct Investment Equity

Valuation of Unlisted Direct Investment Equity

... response to the increasing importance of direct investment equity in a
globalized world and the practical difficulties associated with approximating
market values for this component, the BPM6 has introduced specific valuation
guidelines with ...

Author: Thomas Elkjaer

Publisher: International Monetary Fund

ISBN: 9781451918069

Category: Business & Economics

Page: 72

View: 553

This paper analyzes the seven valuation methods for unlisted direct investment equity included in the recently adopted IMF Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). Based on publicly available Danish data, we test the three methods that are generally applicable and find that the choice of valuation method and estimation technique can have a highly significant impact on the international investment position, pointing to the need for further harmonization. The results show that the price-to-book value method generates more robust market value estimates than the price-to-earnings method. This finding suggests that the valuation basis for the forthcoming Coordinated Direct Investment Survey - own funds at book value -will provide useful information for compiling the international investment position.
Categories: Business & Economics

Frontier Emerging Equity Markets Securities Price Behavior and Valuation

Frontier Emerging Equity Markets Securities Price Behavior and Valuation

Chapter 10 The Philology of Frontier Equity Markets Anatomy of the pre-
emerging market valuation debate The frequent absence of reliable data and the
ubiquitous presence of ambiguous sources exposes frontier markets more to the
perils of ...

Author: Oliver S. Kratz

Publisher: Springer Science & Business Media

ISBN: 9780585308111

Category: Business & Economics

Page: 202

View: 618

Frontier Emerging Equity Markets Securities Price Behavior and Valuation uses the Russian example to illustrate the intricate mechanics of frontier emerging equity market analysis. Frontier markets are those equity markets that do not benefit from the same degree of securities transparency and information dissemination as future emerging markets. In many cases, frontier equity markets are those which have been created almost literally overnight, without the infrastructure and institutional readiness of the nations in which they are located. During the 1990s, frontier emerging markets have formed a new investment asset class which requires a very different set of valuation metrics from mature emerging markets. In developing a multi-stage approach to the understanding and valuing of such markets, this book uses the case of the Russian frontier equity market to illustrate topics such as the relationship between equity market infrastructure and valuation during the `genesis' period of an emerging financial market; evolving market efficiency; and the crucial role of depository receipt programs in the development of these markets. Further, this book develops the first comprehensive framework for valuing a frontier equity market. The role of equity risk premium, as it affects early dynamic equity valuation, is also covered in order to illuminate important drivers of securities price performance. The book closes by discussing the philology of the frontier market valuation debate, in which every market participant is an important purveyor of information and a contributor to the final valuation dimension of equities. The main asset used to present the empirical concepts is a complete research database drawn from actual frontier market investing, which previously had been unavailable to academic researchers. As an active institutional asset management professional at a major Wall Street investment firm, the author marries academic theories, such as market efficiency and market segmentation, to the real world of high stakes and high risk frontier market investing. This book illustrates the applicability and, in some cases, the uselessness of financial theory when applied to this new and rising asset class. It opens the discussion of equity valuation theory for an environment where many conventional rules of asset price determination need to be rewritten. As the first research-level monograph exclusively dedicated to frontier emerging equity market analysis, it offers a unique dual perspective on how academic financial research finds it a complementary and sometimes antagonistic counterpart of real-life investment decision-making. This book can help both professional investors and students of finance to understand frontier equity market valuation and development.
Categories: Business & Economics

Equity Valuation for Analysts and Investors

Equity Valuation for Analysts and Investors

Peer Derived Value, introduced in the book, represents an original and commonsense approach to valuing a stock within its peer group. This book, in my view, is an invaluable addition to any investor's library.

Author: James Kelleher

Publisher: McGraw Hill Professional

ISBN: 9780071759526

Category: Business & Economics

Page: 400

View: 502

Create comprehensive stock valuation models--quickly and efficiently "This amazingly thorough book takes you through real-world financial modeling, provides concise techniques and methods for determining asset value, and offers a blended valuation approach that is responsive to changes in market dynamics. Peer Derived Value, introduced in the book, represents an original and commonsense approach to valuing a stock within its peer group. This book, in my view, is an invaluable addition to any investor's library." -- William V. Campbell, Chairman, Intuit Corporation Equity Valuation for Analysts and Investors introduces you to the financial statement analysis and model-building methodology used by leading equity research firm Argus Research. Written by Jim Kelleher, the company's director of research, the book offers the tools for estimating individual equity cash value. These include a completely original and proprietary valuation methodology, Peer Derived Value, which values an equity based on the stock's current variation from its historical relation to a user-specifi ed peer group. In a conveniently organized format, this in-depth guide covers all the tasks you need to master, including: • Financial statement modeling • Comparables analysis • Discounted free cash fl ow • Industry matrix models • Blending valuation inputs to calculate fair value in any market environment Valuing and predicting the future value of assets and stocks is a laborious task. Successful analysts and investors don't have time for tedious work that is outdated as soon as it's done. Equity Valuation for Analysts and Investors is the comprehensive guide to efficient financial statement analysis and model-building from one of the world-leading independent equity research firms, Argus Research. At the helm of the company's research is author Jim Kelleher, who developed his methodology and model-building techniques during his twenty years covering more than a dozen industries in nearly every sector. A good valuation model is an invaluable tool to help the serious investor: Wring more information from the 10-K and 10-Q Predict unexpected earnings shortfall or positive earnings surprises Master the art of "valuation choreography" One of the biggest challenges to making accurate predictions with a valuation model today is the rapid and constant fluctuation of data. Equity Valuation for Analysts and Investors provides a tried-and-true process for creating effective, compact models that add new measurement and valuation periods and accommodate a company’s unique data presentation and reporting style. This versatile guidebook also provides both a rigorous process and a shortcut for each step in modeling financial statement data so analysts can customize their data focus based on their position in the value chain. When implemented in the real world, the valuation model uses the power of Excel to allow investors to quickly and accurately update their valuations and predictions by simply inputting adjusted data. Take control of your investments now by managing them based on your own research and Equity Valuation for Analysts and Investors.
Categories: Business & Economics