EQUITY VALUATION
Economic Analysis
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Business cycle and industry sectors
•Inflation •Interest rates •International economies •Consumer sentiment
Structural economic changes and Alternative industries
•Demographics •Lifestyles •Technology •Politics and Regulation
INDUSTRY LIFE CYCLE
COMPETITIVE ENVIRONMENT IN AN INDUSTRY
ESTIMATING THE REQUIRED RATE OF RETURN AND THE EXPECTED GROWTH RATE FORMULA FOR REQUIRED RATE OF RETURN: K = RFR + Beta (Rm – RFR)
The constant growth rate FCFE model: Global industry analysis
COMPANY ANALYSIS •
Firm competitive strategies Lessons from Lynch
TENETS OF WARREN BUFFET
Company analysis versus valuation of stock §Growth The companies and growth stocks §Defensive companies and stocks §Cyclical companies and stocks §Speculative companies and stocks §Value versus Growth Investing
When to sell
GLOBAL COMPANY AND STOCK ANALYSIS
1. 2. 3. 4.
EBIT EBITDA Discount Rate Free Cash Flow
GLOSSAR Y
Book Value P/E ratio-
Earning per share Business cycle
Inflation 10. Industrial life cycle includes five stages: • Porter’s five forces model: • K = RFR + Beta (Rm – RFR)
13. g = f (Retention rate and Return on equity) 14. V = FCFE k–g Tenets of Warren Buffet – •
16. The analysts use two general approaches to valuation and the following techniques: E (Rstock) =E (RFR) +BETA stock [E (Rmarket)-E (RFR)]
4. Equity analysis employs 2 kinds of analysis viz., _____________________ and _________________________.
PRESENTED BY •