Articles on Equity Valuation

Equity Valuation: Definition, Importance and Process

This article explains the meaning of equity valuation. It also explains the need, importance and the process followed while conducting an equity valuation.

Market Value, Intrinsic Value and Investment Value

This article provides the basic concepts related to valuation. It provides a definition for the three different types of values. It also compares and contrasts these values to explain the difference amongst them.

Applications of Equity Valuation

This article explains the applications of equity valuation. The applications in varied fields like portfolio management companies and investment banks have been described in this article.

Assumptions Used In Equity Valuation

This article explains the role of assumptions in equity valuation. It lists down some of the common assumptions which are explicitly and implicitly listed in the valuation report.

Qualitative Issues While Conducting Equity Valuation

This article explains the role of qualitative factors in equity valuation. It also explains how these factors play a massive role in influencing the valuation of any company.

Intrinsic Value and Mispricing

This article explains the role of qualitative factors in equity valuation. It also explains how these factors play a massive role in influencing the valuation of any company.

Absolute Valuation Models Vs Relative Valuation Models

This article explains the two broad approaches to equity valuation. It provides a brief overview and introduction regarding the type of models that are used in absolute as well as relative valuation approaches.

Choosing a Valuation Model

This article tells the students about how to choose between multiple valuation models. It also provides examples of different scenarios where different valuation models may be useful.

Sum of the Parts Valuation

This article explains the concept of sum of the parts valuation. It also explains the concept of conglomerate discount and the debate regarding its existence.

Dividend Discount Model: Advantages

This article provides a basic introduction and lists down the advantages of the dividend discount model. It also explains the type of investor groups that prefer this model and the reasons behind their preference.

Dividend Discount Model: Disadvantages

This article explains the disadvantages of dividend discount model. This helps us understand the situations when we should not apply this model.

Single Period Dividend Discount Model

This article explains the concept of single period dividend discount model. It also explains the same with the help of a solved example.

Two Period Dividend Discount Model

This article explains the concept of two period dividend discount model. An illustration has also been provided to facilitate understanding.

Dividend Discount Generic Model

This article explains in detail the generic dividend discount model. It also explains why dividends remain the sole factor behind the valuation of any stock.

Dividend Discount Model: Gordon Growth Rate

This article introduces the concept of Gordon growth model. This concept is one of the most important ones in equity valuation. Hence illustrations have been provided to simplify the calculation.

Gordon Growth Model: Pros and Cons

This article lists down the pros and cons of Gordon growth model. The idea is to give the student a feel of what the possible pitfalls associated with this model could be.

Valuing Preference Shares Using Dividend Discount Model

This article explains how the dividend discount model can be used for the valuation of preference shares. The logic behind the process has been clearly explained with the help of illustrations.

Link between Present Value of Growth Opportunities (PVGO) and Dividend Valuation

This article explains the link between dividend discount model and present value of growth opportunities i.e. two seemingly unrelated concepts. It also explains how this link proves useful while conducting the valuation.

Dividend Discount Valuation: H Model

This article provides information regarding the H model which is used in equity valuation. An illustration is also provided to facilitate better understanding by the students.

Phases of Growth and Valuation Models

This article explains how the growth stage at which the company currently is influences the selection of the appropriate model which can be used to value it.

Dividend Discount Model: Share Repurchase Programs

This article provides information about how companies which use share repurchases programs are to be valued. The focus is on distinguishing this valuation approach from the dividend discount model.

Implied Dividend Growth Rate

This article helps us understand the concept as well as the calculation behind implied dividend growth rate.

Sustainable Growth Rate: Concept

This article explains the concept of sustainable growth rate. It also explains how this concept is extremely important and useful when it comes to valuation.

Sustainable Growth Rate and the Du-Pont Analysis (PRAT Model)

This article explains the relationship between the famous and important Du-Pont ratio analysis and the concept of sustainable growth rate. It also explains how the concepts interact to affect the valuation of the firm.

Spreadsheet Modeling: Dividend Discount Model

This article explains why spreadsheets have become an important tool in equity valuation. It also lists some of the benefits that are derived from their usage.

Estimating Future Dividends

This article explains the multiple methods which can be used for projecting future dividends. It also explains the pros and cons associated with the usage of each method.

Dividend Discount Models: Some Points to Consider

This article provides some general information about the dividend discount models. This information isn’t a part of the theory. However, it is often recommended by analysts as practical advice.

Introduction: Concept of Free Cash Flow

This article provides a brief introduction to the idea of free cash flow. It also explains why free cash flow would be a more apt metric rather than dividends.

Why Is Free Cash Flow Approach Better Than Dividend Discount Models?

This article contrasts that dividend discount models with free cash flow models. It brings out the ownership perspective implied in the two models and also highlights their advantages and disadvantages.

Free Cash Flow to the Firm vs. Free Cash Flow to Equity

This article compares and contrasts the free cash flow to the firm with the concept of free cash flow to equity. The differences are subtle and potentially confusing, thereby needing clarification.

Calculating Free Cash Flow to Firm: Method #1 (Contd): Treatment of Fixed Capital Expenditure

This article explains the different types of cases that may arise while calculating net fixed capital investment which is used to derive the free cash flow to the firm.

Calculating Free Cash Flow to the Firm: Method #2: Cash Flow From Operations

This article explains the step by step procedure to calculate the free cash flow to the firm by using cash flow from operations as an input. An illustration is provided to facilitate better understanding.

Calculating Free Cash Flow to Firm: Method 3: EBIT

In this article we discuss how to derive the free cash flow to the firm if we are given EBIDTA or EBIT as the starting point. The step by step procedure has been discussed.

Calculating Free Cash Flow to Equity

This article explains the different methods of calculating free cash flow to equity (FCFE). The concept of net borrowing and its application have also been explained.

Calculating Free Cash Flows: The Case of Preferred Shares

This article explains how preferred equity needs to be treated while calculating free cash flows to the firm as well as to equity. The adjustments that need to be made have been described in detail.

Changes in Financing Policy: Effect on Free Cash Flow

This article provides information about which changes in the financing policy are relevant when calculating free cash flow to the firm and free cash flow to equity.

Single Stage FCFF Model

This article introduces the single stage free cash flow to the firm model. It explains how this model can be used for valuation and what the assumptions are when this model is used.

Single Stage FCFF Model to Equity Valuation

This article explains the single stage free cash flow to equity valuation model in detail. It outlines the possible sources of confusion between this model and other similar model.

Variations in Cash Flow Models

This article explains the basis on which multiple models of free cash flow valuation stand. It explains the core assumptions varying which can provide us the different free cash flow based valuation models.

How to Value Companies like Netflix?

This article explains the rise of a subscription-based business model. It also lists the various metrics that are commonly used by investors to evaluate the growth potential of a subscription-based company.

Debt to Equity Swaps

This article explains the concept of debt to equity swaps for sovereign debt. It explains the swap process. It also lists the advantages and disadvantages of these swaps.

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Authorship/Referencing - About the Author(s)

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