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Published byJayden Longfellow Modified over 10 years ago
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Culverhouse Investment Management Group Valuation Methodologies Michael Jaklitsch
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OVERVIEW “Price is what you pay. Value is what you get.” -Benjamin Graham What is it worth?: 1.) $1,000,000 straight cash 2.) House in Miami 3.) University of Alabama brand 4.) Symantec Corporation
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Appreciating the Art 2 key valuation questions: 1)What is the company worth? HIGHLY subjective 2)Why is it worth that much? “value drivers” Understand what drives value & how value can change “How does this company make money?”
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Understanding Enterprise Value
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How Good Is This Company at Making Money? Sales Operating Income (EBIT) EBITDA Free Cash Flow
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3 Pillars of Valuation Public Comparable Analysis **Acquisition Comparable Analysis, Liquidation Analysis** Discounted Cash Flow Analysis
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Public Comparable Analysis Comparison with similar companies Analysis at a specific point in time RELATIVE value
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Building Good Comps Similar in terms of: 1)Operations 2)Financials Subjective Where do I find this cool stuff?: 1)Scary Bloombergs 2)Yahoo Finance 3)Morningstar.com
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Comps to Focus On ….also: Operating Margin FCF yield P/E Return on Invested Capital
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Discounted Cash Flow Analysis Intrinsic value of the company Theoretical vs. relative value Present Value of the cash that company will make in the future Gotta discount that cash back to today
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Advantages of a DCF Valuation Intrinsic valuation Flexible, adaptable analysis Can tinker & play Requires model maker to scrutinize drivers of value
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VALUATION Sales CAGR 2013-2018: -0.2% EBIT CAGR 2013-2018: 3.0% FCF CAGR 2013-2018: 3.7%
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Questions? In 2 weeks…..the one and only Mac Fountain
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