Multiples approach, peer comparison, forms of discounted cash flows... these are the usual ways of looking at valuations of companies.
Valuations of companies matter differently based on the time horizon and objectives of investments
How about:
What is the earnings yield based on the current price at which I can buy the company?
What am I really buying with an equity share? (look at minority, preference, debt)
What is the company doing with its cash earnings? -> Is it going into repaying creditors? funding working capital? funding expansion through fixed assets? rewarding employees?
How certain am I that this company will make this much money (profits) in the future? Is there potential for losses?
How certain am I that this company can make a lot more money in the future?
How can the company utilise the cash it generates in growing the business at a similar rate as in the past?
Through all of the above, how can the value of the company erode relative to the current market value? And how can the value of the company substantially increase from hereon?
How sustainable are the company's operations in relation to the field of business in which it operates? i.e. does it have to keep changing itself at a fast pace/ slow pace/ or not really...
Valuations of companies matter differently based on the time horizon and objectives of investments
How about:
What is the earnings yield based on the current price at which I can buy the company?
What am I really buying with an equity share? (look at minority, preference, debt)
What is the company doing with its cash earnings? -> Is it going into repaying creditors? funding working capital? funding expansion through fixed assets? rewarding employees?
How certain am I that this company will make this much money (profits) in the future? Is there potential for losses?
How certain am I that this company can make a lot more money in the future?
How can the company utilise the cash it generates in growing the business at a similar rate as in the past?
Through all of the above, how can the value of the company erode relative to the current market value? And how can the value of the company substantially increase from hereon?
How sustainable are the company's operations in relation to the field of business in which it operates? i.e. does it have to keep changing itself at a fast pace/ slow pace/ or not really...
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