Valuations

Valuation By The Numbers Outline


1) Research

…a) Latest 10K and 10Q, annual and quarterly reports, respectively

…b) Quarterly earnings release

…c) Broker reports

……i) Company and industry specific details

…d) News articles

…e) Company Website

……i) Investor relations

……ii) Presentations

……iii) Press releases

…f) Competitors


2) Spread Financial Statements: Income statements, Balance sheets, Cash flows

…a) Check for one-time adjustments

……i) Cash and non-cash items

……ii) Management’s discussion and analysis

……iii) Company quarterly earnings release


3) Valuation

…a) Comparable companies

…b) Weighted Average Cost of Capital (WACC)

……i) Beta (unlevered)

……ii) Cost of Equity (COE)

……iii) Cost of debt (COD)

…c) Base assumptions

……i) Revenues

……ii) EBITDA

……iii) Earnings

……iv) Tax Rate

……v) Working Capital

……vi) Capital Expenditures

……vii) Depreciation

……viii) Debt (cost of)

……ix) Net Operating Losses

……x) Share count


4) Investment Memo

…a) Company

…b) Recommendation

…c) General

…d) Strategic

…e) Financial

…f) Operational

…g) Valuation

…h) SWOT

…i) Risk & Mitigating factors


The goal is to communicate why or why not to invest in the company.

This should be viewed from the perspective of how the company creates value and why it will be worth more tomorrow. Bear in mind revenues are price times volumes (R = P x V).

Is the industry liked?

How will the company grow and improve operations and cash flows?

How does the company finance itself?

What catalysts exist to accelerate or unlock value?

Above is a basic outline for consideration.

Greater due diligence must be undertaken to make a reasonable investment consideration.

For definitions of any kind visit Investopedia.com.

We have valuation templates and can help with valuations. We can help better articulate above.

Published by Landon

https://landon77daily.com/about-landon/

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