article thumbnail

The Dividend Discount Model (DDM): The Black Sheep of Valuation?

Brian DeChesare

When I started offering financial modeling training , I never expected to get questions about a methodology like the Dividend Discount Model (DDM). Otherwise, the written version follows: Why Use a Dividend Discount Model? If you sum up these numbers, you can see whether the company is valued appropriately.

article thumbnail

Valuation Using Multiples—What Is It and How Does It Work? Core Ideas Explained

Valutico

The ratio used might be EV/EBITDA, EV/Sales, P/E or another, depending on the valuation performed and the type of business being valued. The ratio is then used in a simple multiplication calculation, to determine the value of the company in question. Broadly, there are two different common ways to value using multiples. .

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Trending Sources

article thumbnail

Your Guide to Valuing a Company Using the Multiples Approach

Valutico

The ratio used might be EV/EBITDA, EV/Sales, P/E or another, depending on the valuation performed and the type of business being valued. The ratio is then used in a simple multiplication calculation, to determine the value of the company in question. Broadly, there are two different common ways to value using multiples. .

article thumbnail

Company Valuation Methods—Complete List and Guide

Valutico

The income-based approach determines a company’s value by assessing its anticipated future income-generating potential, employing methodologies such as Discounted Cash Flow (DCF) Analysis, Capitalization of Earnings, the Income Multiplier Method, Dividend Discount Model (DDM), and Earnings-Based Valuation.

article thumbnail

29 Valuation Interview Questions and Answers: Mastering the Art of Crackling Interviews

Equilest

Uncover the intricacies of financial modeling, from understanding fundamental concepts like Free Cash Flow to Firm and Dividend Discount Model, to navigating advanced methodologies such as LBO and DCF. It provides a clearer picture of a company's ability to reward its shareholders with dividends or share buybacks.

article thumbnail

A Follow up on Inflation: The Disparate Effects on Company Values!

Musings on Markets

In a final assessment, I break down companies based upon operating cash flows (EBITDA as a percent of enterprise value) and dividend yield (dividends as a percent of market capitalization).

article thumbnail

Good Intentions, Perverse Outcomes: The Impact of Impact Investing!

Musings on Markets

Even when you are successful in dissuading these companies from "bad" investments, but may not be able to stop them from returning the cash to shareholders as dividends and buybacks, rather than making "good" investments. trillion of cumulated enterprise value at fossil fuel companies. in the 1998-2010 time period to 5.95