INVESTMENTS 投资学 （博迪BODIE, KANE, MARCUS）Chap018 Equity Valuation Models.ppt

Figure 18.4 Earnings Growth for Two Companies Figure 18.6 P/E Ratios for Different Industries, 2007 Other Comparative Value Approaches Price-to-book ratio Price-to-cash-flow ratio Price-to-sales ratio Figure 18.7 Market Valuation Statistics Free Cash Flow Approach Value the firm by discounting free cash flow at WACC. Free cash flow to the firm, FCFF, equals: After tax EBIT Plus depreciation Minus capital expenditures Minus increase in net working capital Comparing the Valuation Models In practice Values from these models may differ Analysts are always forced to make simplifying assumptions The Aggregate Stock Market Explaining Past Behavior Forecasting the Stock Market Table 18.4 SP 500 Price Forecasts Under Various Scenarios INVESTMENTS | BODIE, KANE, MARCUS INVESTMENTS | BODIE, KANE, MARCUS Copyright ? 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 18 Equity Valuation Models Valuation: Fundamental Analysis Fundamental analysis models a company’s value by assessing its current and future profitability. The purpose of fundamental analysis is to identify mispriced stocks relative to some measure of “true” value derived from financial data. Balance Sheet Models Dividend Discount Models (DDM) Price/Earnings Ratios Free Cash Flow Models Models of Equity Valuation Valuation by Comparables Compare valuation ratios of firm to industry averages. Ratios like price/sales are useful for valuing start-ups that have yet to generate positive earnings. Limitations of Book Value Book values are based on historical cost, not actual market values. It is possible, but uncommon, for market value to be less than book value. “Floor” or minimum value is the liquidation value per share. Tobin’s q is the ratio of market price to replacement cost. Intrinsic Value vs. Market Price The return on a stock is composed of dividends and capital gains or losses. The expected HPR may be more or less than the required rate of return, based on the st