Valuation Topics

Topics related to standalone valuation including fundamental valuation, relative valuation, sum-of-parts and other techniques

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Last 10 posts

DCF Mid-Year Convention
Hello WST,
A quick question, would you recommend using mid-year convention for DCF because obviously firms don't normally receive all its cash at the end of the fiscal year? Many thanks.
Go to post added 1 month ago
DCF Correct Time Period inputs
Hi WST, I have a not so smart question, let's say I am making a 5 year projection (2018-2022) for DCF analysis to calculate a company's implied stock price. Now, the company just releases its latest financial statements. So should I use the latest financial figures to calculate, say, net debt, an... Read More
Go to post added 1 month ago
Warrants
Why do companies issue warrants? Do warrants usually have a premium price over the current market value? if yes, why is that?
Go to post added 7 months ago
Stock rights offering
Why is that the stock price normally gap down after ex rights date? What seems to be the logical reason for the price adjustments?
Go to post added 8 months ago
Hedging Instruments and TEV
Hi, is there ever a case when you would add/subtract the fair value of hedging instruments when getting to enterprise value from equity value?
Go to post added 10 months ago
Question on interest income impact on FCFE and valuation
I have this company with no debt and high cash pile. (1) In the FCFE calculation = FCFF - (int x (1-tax)) + net borrowing; I will need to add back interest expense * (1-tax). But in my Co case with high cash pile, do i add back interest income instead? (2) when determining the value per shar... Read More
Go to post added 10 months ago
Accounting question on
A company invest in a target and obtain 40% stake for 120mn. So the target is valued at 300mn. 6 months later, the company is increasing its stake in the target from 40% to 60%. The announcement read: "The increased stake will take effect following a share capital increase, whi... Read More
Go to post added 11 months ago
Free Cash Flow to Equity
Would increase in debt (refinancing) in a year increase free cash flow to equity in that year?
Go to post added 11 months ago
Seasonal Working Capital
How should a working capital target be chosen for a business that has seasonal net working capital (for example, every year a company must build up inventory and its suppliers do not take credit, or bonuses for employees are paid at the end of each fiscal year). From what I have seen, many practitio... Read More
Go to post added 1 year ago
FCFF - Unlevered Free Cash Flow
Hi, I took a class last time regarding corporate valuation and there was a discussion on calculating unlevered free cash flow, where we deduct capex (and we do not add borrowing for that year). What should we do if the company borrowed a huge amount of cash for capex that year? Should we really have... Read More
Go to post added 2 years ago