专业估值(英文)3.docVIP

Market-Based Valuation: Price and Enterprise Value multiples Methods: comparables and forecasted fundamentals (based on DCF model) Ratios: P/E, P/B, P/S, P/CF, Dividend yield Pros and Cons: Meaningful when earning is negative? Popular in the investment community? Accounting practices can easily distort the ratio? The primary determinant of investment value (how closely related to earnings)? Volatile and transitory? Calculations Trailing P/E= Market price per share/EPS over pervious 12 months Leading P/E=Market price per share/EPS over next 12 months P/B=Market value of equity/book value of equity Book value of equity= Common shareholders’ equity= net asset – preferred stock P/s =Market value of equity/Total Sales Key: estimate earnings Normalized earnings Historical average (average EPS over the most recent business cycle. Average return on equity=average ROE * current book value per share Analyze the factors influence P/E: Gordan growth model Justified trailing P/E= (1-b)*(1+g)/(r-g) Justified leading P/E=(1-b)/(r-g) Justified P/B ratio (ROE-g)/(r-g) Justified P/S ratio net profit margin (E/S)*justified trailing P/E Divided yield: (r-g)/(1+g) Need to memorize the formulas, at least the one for justified trailing P/E Others P/E Regression Predictive power is uncertain Relationship between P/E and fundamental variables may change over time Multicollinearity is often a problem (the relationship among variables) PEG=P/E/G Stocks with lower PEG is more attractive, assuming similar risk Limitations Relationship between P/E and g is not linear PEG does not account for risk PEG does not reflect the duration of high-growth period TIC: total invested capita: includes cash and short – term investment Terminal value Reflect the earning growth that a firm can sustain over the long run Two methods: fundamental vs multiples( Justified P/E vs Benchmark P/E Calculations Terminal value in year n = Justified (Benchmark) leading P/E ratio * forecasted earnings in year n+1 Terminal