Musings on Markets

JULY 17, 2023

In 2022, old-time value investors felt vindicated, as the damage that year was inflicted on the highest growth companies, especially in technology.

Marketability 98

Marketability Risk Premium Start-ups Treasury 98

Sun Acquisitions

OCTOBER 13, 2023

By comparing key financial metrics such as price-to-earnings (P/E) ratios, price-to-sales (P/S) ratios, and price-to-book (P/B) ratios, analysts can estimate the target company’s value. In the context of M&A, asset-based valuation techniques such as book value and liquidation value are commonly employed.

Discounted Cash Flow 59

Discounted Cash Flow Book Value Liquidation Value Price to Book 59

Valutico

MAY 19, 2025

Asset write-downs or impairments: A reduction in the book value of assets or goodwill when they are deemed overvalued. Other metrics like Price-to-Book or Dividend Yield are typically more relevant for these sectors. Litigation expenses/settlements: Costs stemming from lawsuits or legal disputes that are unusual or infrequent.

EBITDA 52

EBITDA Enterprise Value Capital Structure EBIT 52

RNC

OCTOBER 1, 2024

Different Methods of Benchmark Valuation There are several ways to conduct a benchmark valuation, each with its unique focus and methodology: Price-to-Earnings Ratio (P/E) The P/E ratio compares a company’s current share price to its earnings per share (EPS). It’s one of the most popular metrics for evaluating stock performance.

Comparable Company Analysis 52

Comparable Company Analysis Price to Book Price to Earnings Book Value 52

RNC

AUGUST 23, 2024

Metrics such as price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and other multiples are used to evaluate how the security compares to its peers. Comparative Analysis : Also known as relative valuation, this approach involves comparing the security to similar assets in the market.

Dividends 52

Dividends Discounted Cash Flow Price to Book Compliance 52

RNC

JULY 2, 2024

By analyzing factors like the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio, companies can determine if their shares are undervalued or overvalued compared to peers.

Business Valuation 52

Business Valuation Dividends Discounted Cash Flow Price to Earnings 52

RNC

JUNE 20, 2024

By analysing factors such as the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, and the enterprise value-to-EBITDA (EV/EBITDA) ratio, companies can determine whether their shares are undervalued or overvalued relative to its peers.

Discounted Cash Flow 52

Discounted Cash Flow Dividends Comparable Company Analysis Price to Earnings 52

The Mentor Group

APRIL 1, 2024

By analyzing the valuation multiples (such as price-to-sales or price-to-book ratios) of comparable businesses, you can estimate a valuation range for the company in question. This method relies on finding appropriate comparables.

Discounted Cash Flow 40

Discounted Cash Flow Asset-based Approach Liquidation Value Intangible Assets 40

RNC

AUGUST 23, 2024

Metrics such as price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and other multiples are used to evaluate how the security compares to its peers. Comparative Analysis : Also known as relative valuation, this approach involves comparing the security to similar assets in the market.

Discounted Cash Flow 52

Discounted Cash Flow Dividends Precedent Transaction Analysis Compliance 52

RNC

AUGUST 23, 2024

Metrics such as price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and other multiples are used to evaluate how the security compares to its peers. Comparative Analysis : Also known as relative valuation, this approach involves comparing the security to similar assets in the market.

Discounted Cash Flow 52

Discounted Cash Flow Dividends Precedent Transaction Analysis Compliance 52

Valutico

MAY 6, 2024

Asset-based methods like Adjusted Book Value, Liquidation Value, and Replacement Cost consider the worth of tangible assets. Excerpted from the book “Valuation for Mergers and Acquisitions” by Barbara S. Income-based methods such as Discounted Cash Flow analysis focus on future cash flows to determine value. Petitt and Kenneth R.

Discounted Cash Flow 52

Discounted Cash Flow Precedent Transaction Analysis Weighted Average Cost of Capital Comparable Company Analysis 52

Andrew Stolz

JANUARY 12, 2022

Book value is the value attributable to shareholders in case the company sells all its assets and repays its liabilities (also called liquidation value). A price-to-book ratio of less than 1x indicates that the market values the net assets less than the balance sheet suggests. Fundamentals, Valuation, Momentum, and Risk (FVMR).

EBIT 52

EBIT Price to Book Book Value Liquidation Value 52

Sun Acquisitions

NOVEMBER 17, 2023

The valuation is based on key financial metrics such as Price-to-Earnings (P/E) ratios, Price-to-Sales (P/S) ratios, or Price-to-Book (P/B) ratios. Comparable Company Analysis (CCA): CCA involves comparing the target company to similar publicly traded companies.

EBITDA 59

EBITDA Discounted Cash Flow Intangible Assets Comparable Company Analysis 59

Musings on Markets

JANUARY 6, 2023

For example, I have seen it asserted that a stock that trades at less than book value is cheap or that a stock that trades at more than twenty times EBITDA is expensive. Standard deviation in stock price 2. Price to Book 3. High-Low Price Risk Measure 5. EV/Sales and Price/Sales 5. Cost of Equity 1.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Musings on Markets

MAY 24, 2021

There is a risk of reading too much into the data in this table, but the three best decades for low price to book stocks were 1940-49, 1970-79 and 1980-89, the three decades when inflation was high, and in two of those decades, inflation was much higher than expected.

Treasury 56

Treasury Start-ups Risk Premium Price to Book 56

Equilest

AUGUST 6, 2023

Key Financial Ratios: Ratios such as Price-Earnings Ratio (P/E), Price-to-Book Ratio (P/B), and Debt-to-Equity Ratio provide valuable insights into the company's performance and market position. Understanding the company's financial health is fundamental to valuation.

Discounted Cash Flow 40

Discounted Cash Flow Business Valuation Precedent Transaction Analysis Comparable Company Analysis 40

Musings on Markets

JANUARY 9, 2021

Consider, for instance, an investor who picks stocks based upon price to book ratios, who finds a stock trading at a price to book ratio of 1.5. buy stocks that trade at less than book value or trade at PEG ratios less than one) for individual stocks.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Equilest

NOVEMBER 25, 2023

One key emphasis is on the Price to Book Value multiple. The Price to Book Value multiple, which compares a bank's market value to its book value, becomes crucial. Emphasizing Unique Considerations: Valuing a bank requires a distinct approach due to the nature of its operations.

Discounted Cash Flow 52

Discounted Cash Flow Dividends Enterprise Value Terminal Value 52

Reynolds Holding

NOVEMBER 8, 2023

MVA can be understood as the Price-to-Book ratio; however, the book value has been refined to account for economic adjustments. The Market Value Added (MVA) Spread from the ISS EVA framework serves to assess company valuation.

Enterprise Value 52

Enterprise Value Price to Book Marketability Book Value 52

Musings on Markets

JULY 22, 2021

The second is the cost of capital, a number that most valuation classes and books (including mine) belabor to the point of diminishing returns. Finally, dismissing Zomato as an investment, just because it does not make money now, or fails to meet some conventional value tests on pricing (PE, Price to Book), is investing malpractice.

Marketability 99

Marketability Start-ups Equity Price to Book 99

Musings on Markets

MAY 7, 2023

Consequently, you can only value the equity in a bank, and by extension, the only pricing multiples you can use to price banks are equity multiples (PE, Price to Book etc.).

Banking 86

Banking Price to Book Dividends Book Value 86

Musings on Markets

MARCH 19, 2022

Slicing the data based on sector yields the following: Against, there are no surprises, with energy being the only sector to post positive returns and with consumer discretionary and technology generating the most negative returns.

Start-ups 100

Start-ups Risk Premium Equity Market Capitalization 100

Musings on Markets

MARCH 25, 2021

Interest Rates and Value As interest rates have risen, the discussion in markets has turned ito the effects that these rates will have on stock prices.

Equity 52

Equity Risk-free Rate Treasury Start-ups 52

Musings on Markets

JANUARY 19, 2022

The results are similar if you break stocks down based upon price to book ratios or revenue growth rates.

Risk Premium 99

Risk Premium Risk-free Rate Start-ups Equity 99

Musings on Markets

DECEMBER 10, 2023

Are markets building in the recognition that Berkshire Hathaway's future will be in the hands of someone other than the two legendary leaders?

Key Person Discount 130

Key Person Discount Start-ups Price to Book Marketability 130

Musings on Markets

APRIL 20, 2025

Implicit in this strategy is an absolute belief in mean reversion, i.e., that what goes down will almost always go back up, and that buying at the beaten down price and being willing to wait will therefore pay off. The evidence for this strategy comes from many sources.

Start-ups 137

Start-ups Price to Book Marketability Equity 137

Musings on Markets

FEBRUARY 4, 2023

You see similar movements in the price to book, where the stock has gone from trading under book value to 6.7 times book value, and the enterprise value, which was less than revenue in 2016-21 to 2.71 times revenues in the most recent two years.

Start-ups 101

Start-ups Market Capitalization Marketability Equity 101

Musings on Markets

JANUARY 26, 2025

In the next section, I look at stock returns for companies in different price to book deciles, in a simplistic assessment of the value premium. As with the size premium, low price to book (value) stocks have struggled to deliver in the twenty first century, and as with the small size premium, investors have waited for it to return.

Price to Book 79

Price to Book Start-ups Book Value Marketability 79