200707-01

Reduce it by the equity reinvestment needs in that year and then assume a perpetual growth rate to get to a value

200707-02

The free cashflow to the firm is the sum of the cashflows to all claim holders in the firm, including stockholders, bondholders and preferred stockholders

200707-03

Assuming that the market value debt ratio is 30% will require a growing firm to issue large amounts of debt in future years

200707-04

Return on capital valuation

200707-05

Firm Valuation: The APV approach

200707-06

While we have not explicitly allowed for a preferred stock component in this process, we can have preferred stock as a part of capital

200707-07

It is in the best interests of the stockholders not to refinance the debt

200707-08

The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share)

200707-09

If the cash is returned to stockholders, it would yield them a surplus value

200707-10

Some firms do so for the allure of the higher returns they can expect to make investing in stocks and corporate bonds, relative to treasury bills

200707-11

Investments that are available for sale and trading investments

200707-12

If the firm you are valuing has preferred stock, you would use the market value of the stock

200707-13

They are allowed to treat the difference between the stock price and the exercise price as an employee expense

200707-14

Since the stock is traded and you can obtain a stock price, it would seem that you should be using the current stock price to value options

200707-15

In four firms that also had voting preferred stock, however, the voting common stock traded at a discount

200707-16

Thus, in a market where all internet stocks see their prices bid up, relative valuation is likely to yield higher values for these stocks

200707-17

Should a software analyst care about price earnings ratios of utility stocks?

200707-18

This firm will be able to return half of its earnings to its stockholders in the form of dividends or stock buybacks

200707-19

Some do only stock-based acquisitions and use only pooling, others use a mixture of pooling and purchase accounting

200707-20

A greater willingness to take risk on the part of investors will result in a lower risk premium for equity and a higher PE ratio across all stocks

200707-21

For instance, higher risk stocks (higher betas) have higher PE ratios, when fundamentals would lead you to expect the opposite

200707-22

The mean PEG ratio for technology stocks is much higher than the mean PEG ratio for non-technology stocks

200707-23

Thus, the value to EBITDA will be too low, leading it to be categorized as an undervalued stock

200707-24

The stock had a beta of 1.05 and traded for ten times earnings

200707-25

You would need to compute the estimated market value of management options and conversion options (in bonds and preferred stock) and add them to the market value of equity

200707-26

The firms that should draw attention from investors are those that provide mismatches of price-book value ratios and returns on equity

200707-27

Payout ratio at the end of the year BETA = Beta of the stock

200707-28

The strategy of picking stocks with high book/price ratios (low price-book values) yielded an excess return of 36 basis points a month

200707-29

A combination of a low price-book value ratio and a high expected return on equity suggests that a stock is undervalued

200707-30

The stock was trading at 1.15 times revenues

200707-31

The market reacted negatively to the announcement of price cuts and the stock price dropped approximately 20% on the announcement

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Previous Issues

200706

Does a firm reinvest back for future growth

200705

As an investor, would you invest your entire portfolio in one asset

200704

The analysis will be done from the perspective of equity investors

200703

The key to profitable investing

200702

Small stocks are running up, with large bounces at bottoms

200701

Institutional traders are raising cash and selling stock

200612

The first mistake: investing without a plan. The second mistake: using the wrong investment strategy