valuation fundamentals

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Valuation FundamentalsTable of Contents

> Introduction– Concept of Fair Value– Who uses Valuation?

> Valuation & Wealth Maximization> Valuation Approaches> Valuation Methods> Is there a ‘Best’ method?

> Which method is best suited ?– Public vs Private Company– By Scenario– By Sector

> Valuation FAQs– General– DCF– Comparables

Table of Contents

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At Finatics, we define Equity Valuation as “A process that involves determining „Fair Value‟ of a company‟s equity in order to assist buy/sell decisions for the purpose of Financial or Strategic Investment”


Equity Valuation FundamentalsIntroduction – Concept of Fair Value

So what is Fair Value of an investment?

Put Simply, Fair Value is the price at which, one will get the desired rate of return when the investment is sold to a willing & able buyer.The worth of an investment is determined by whether it is meant for long term use to generate returns (i.e. Strategic Investment) or for resale when the „right price‟ or „fair value‟ is achieved (Financial Investment). The purpose of Valuation is to determine a fair value range of an investment (or capital asset) using one or more of several available techniques

How should the worth of an Investment be determined ?

As discussed, investment related demand will be driven by expected return resulting from demand of other similar opportunities available, potential to generate cash and implied risk.When determining whether expected return can be achieved, one way is to estimate the cash generated from the „Asset‟ against what is investedafter considering „Time Value of Money‟ (a.k.a. Net Present Value)

…(Contd)

… the other way is to find out what are other „similar‟ opportunities available for, and then comparing the extra price paid for or money saved by the Asset.Another approach one may use is determining the cost of a substitute a.k.a. replacement cost! Valuation deals with understanding & applying these 3 approaches in varying situations

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Valuation is used at two levels – Primary, which deals with „Value Creation‟ at a Corporate Finance level– Secondary, that deals with market intermediaries & investors


Equity Valuation FundamentalsIntroduction – Who uses Valuation?

Buy Side Institutions

Buy Side refers to those institutions that are engaged in buying research conducted by others. They invest/manage client‟s funds (as well as their own) into investments in primary or secondary markets. Primary refers to direct investment in companies while secondary involves buying/selling stocks in the stock market.E.g. – Mutual Funds, Hedge Funds, Private Equity Firms & Venture Capitalists (any Asset Management Company).

Sell Side Institutions

Sell side are involved with recommending buy/sell decisions to clients. The buyers of such reports may be Retail clients, High Net-worth Individuals or Institutional investors. E.g. – Brokerage Houses, Research Firms & focused KPOsNote: Bulge bracket Investment Banks play both buy/sell side roles.

Corporate Finance

Corporate Finance refers to managing finances of a company and involves selecting projects, creating budgets & arranging funds. Their job is the toughest one i.e. Creating Wealth in the secondary market through managing expectations and delivering superior results. They use valuation to understand gaps in expectation and performance of the firm as a whole and to take decisions at a project level!

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What is Wealth Maximization?Strategies are made in the boardroom while their results are declared by the secondary market! Wealth Maximization deals with making business decisions that create „wealth1‟ for shareholders instead of just maximizing Profit/EPS


Equity Valuation FundamentalsWealth Maximization through Valuation

1 Wealth refers to the total wealth created for shareholders through capital appreciation + dividends a.k.a. Total Returns to Shareholder (TRS)

Note: Today, many companies believe that „Value Creation‟ for customers & society is as relevant as maximizing shareholder returns. However, these two goals may result in friction at times leaving the shareholders to prioritize!

Wealth Maximization

through „Valuation driven‟ decision making

Step 1 - Understand Expectations

Expectations are difficult to capture as they are not only affected by sentiments but also fundamental performance

Step 2 - Quantify expectations through Valuation

Valuation is the process of capturing expectations with the „most likely‟ scenario in terms of business performance

Step 3 - Adapt expectations in Business Decisions

Business decisions must be aligned to expectations so as to maximize wealth. Managers must ask themselves whether a project will add wealth to the firm as a whole

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Why not have just one approach?The idea is to capture all dimensions that a investor may be concerned with. Unfortunately, no single valuation methodology is „complete‟ and hence two or more approaches are necessary to arrive at a „fair value range‟


Equity Valuation FundamentalsValuation Approaches

Income based

Income based approaches aim to discover value of a firm through its income metrics like Net profit or Free Cash Flows etc. E.g. DCF Valuation, Edwards Bell Ohlson (EBO) model etc.Pros Cuts through accounting variances &

earnings abnormalities while also considering Macro level implications to determine fair value of the firm

Considers Time value of Money Most detailed & scientific Provides intrinsic value Used as a basis to determine whether

valuation is „stretched‟Cons Fails to capture sentiment Extremely data intensive A forecast, by virtue, brings with it an

element of uncertainty

Market based

Market based approaches aim to capture market sentiment while also taking into account peer comparison.E.g. Trading & Transaction Comparables i.e. Relative ValuationPros Captures market sentiment Very quick & easy to apply Works best between quarters Results are very easy to explain/pitchCons Does not work well for startups Has a tendency to overvalue stocks in

bullish markets and undervalue in bearish ones

Sways with the market as there is no anchor or „intrinsic value‟

Many believe that the approach is responsible for bubbles

Asset based

Asset based approaches aim to value a firm by valuing its assets on a carry value, replacement value or liquidation value basisE.g. Liquidation value approach, Replacement cost method and Book Value Pros Works best for distressed & loss

making companies Works best in the downturn Gives „worst case scenario‟ value (i.e.

in a way intrinsic value) May also be used for target screening

as first step in the M&A lifecycleCons Severely undervalues profit making

companies by not capturing market sentiment or business performance

Fails to capture market sentiment

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Equity Valuation FundamentalsValuation Methods

Discounted Cash Flows

DCF Valuation aims to discover the „Intrinsic Value‟ of a company by estimating present value of future cash flows.Sub Methods: - Enterprise valuation (FCF/F)- Equity method (FCFE)- Economic Profit Model - APV approachPros: - Very scientific and detailed- Normalizes accounting noise- Provides intrinsic valueCons: - Sensitive to many factors most of which are at the discretion of the analyst. - Does not work well between quarters - Fails to capture sentiment

Best Suited For: The long term. Acts as an anchor for other methods

Trading Comparables

a.k.a. Relative Valuation, aims to determine valuation by peer comparison and hence captures market sentimentSub Methods: - Equity & Enterprise MultiplesPros: - Capture Market Sentiment- Quick & Easy to apply- Works between quartersCons: - In the real world, there is no such thing as a perfectly comparable company- Valuation is always biased as there is no benchmark valuation of the company in question- Bull markets lead to more bullish valuation and vice-versa

Best Suited For: Highly volatile companies, cyclical companies. Suited for the short term

M&A Valuation

Although not an entirely different methodology it deals with judging the feasibility of a merger/acquisition using slightly modified techniquesMethods Used- Accretion/Dilution Analysis (measures whether EPS increases or decreases post deal)- Transaction Comparables (scrutinizes historical transactions for „deal premium‟ paid on similar acquisitions) - LBO modeling (measures the „IRR‟ available for equity contributors post debt repayment)

Remark: These are the most popular techniques used for valuing M&As and hence there is little choice available to discuss pros/cons

Other Methods

Other methods some of which are „academic‟ in nature and hence best left in books. However, theory is the basis of practice hence they deserve a good read!- First Chicago Approach- Contingent Claim Valuation- Edwards, Bell & Ohlson model- Dividend Discount Model2

- Liquidation Value approach2

- Replacement Cost approach2

- Sum Of The Parts Valuation2

(SOTP ) a.k.a. Multi-business Valuation

Remark: Modern theory & practice is a result of great amount of invaluable contributions made by several academicians on the subject. Some of these methods were part of the evolution chain and that was the only role they ever played! 2 briefly discussed ahead

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Equity Valuation FundamentalsIs there a „Best‟ method?

3 briefly discussed ahead

Simply Put

No. There is no „Best‟ method. Apart from the pros/cons, each method is designed to suit: - an investment horizon- an Investment type- market conditions- a specific sector3

- a specific scenario3

Investment Horizon & Valuation

Investment Horizon i.e. Short Term or Long termA short term (let‟s say less than one year) investor Is typically interested in determining fair value between quarterly results. Although DCF provides an intrinsic value, in the short run, share prices may be very volatile and DCF will not help such an investor in any way. Hence, Short term investors a.k.a. „speculators‟ must rely on trends, sentiments and news to determine valuation. These factors are best captured in the Comparables Method (i.e. Relative Valuation).

Investment Type & Valuation

Investment typei.e. Strategic or FinancialFinancial investments are made in the secondary market where one relies on secondary data with the idea of liquidating the investment at some point in the horizon instead of generating regular returns from the capital itself. On the other hand, Strategic investments are the ones made as part of „Corporate Finance‟ and hence data availability is not an issue and the investor may go for primary research when more data is required. Needless to say, the funds involved & research carried out is more intense. E.g. Project AppraisalWhich method for which type?For a Financial Investment one may choose a Market / Income / Asset based valuation approach. However, in case of strategic investments one must rely on an Income based approach backed by an asset valuation.

The best way out

The best approach is what many call the “Valuation Football Field” a.k.a. “Triangulation”. This involves determining fair value using all relevant approaches followed by drawing an inference in terms of a fair value range. This approach also helps in using one method to „sanitize‟ the other!

Market Conditions & Valuation

Bullish & Bearish Markets call for different valuation strategies and hence different methodologies. In bullish markets, many shift from DCF to Comparables in the pretext that “DCF fails to capture that the market as a whole has moved to a higher level”. However, they fail to recognize that without DCF, the valuation is „floating‟ and is no longer tethered to an intrinsic value. The opposite prevails in case of bearish markets, when analysts swear by DCF, now claiming that Comparables understate valuation.Bottom-line: It is at an inflection point, that the truth about such theories is exposed. Secondly, one cannot predict inflection points implying that, along with comparables an intrinsic value method must always be used to see how far the tether can be stretched.

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Equity Valuation FundamentalsWhich method is best suited: Public vs Private

Public Company Valuation

Public Companies, by law, must provide audited financial results on a regular basis to the public at large. That apart, they also „may‟ make available a host of other investor friendly information in the form of industry trends, presentations, analyst meets & conference calls. Secondly, Public companies get far more coverage in the form of analyst reports, news, management guidance and interviews. All this makes the job of valuation an easier one. With such data availability it is easier to use any of the valuation techniques with a high degree of reliability. For such companies, any of the valuation methodologies discussed earlier may be used (also depending on the Scenario and sector)

Private Company Valuation

It must be noted that , Private company valuation is driven by a strategic purpose like Private Equity, Joint Ventures and M&As. For such purposes, traditional „financial investment‟ driven methodologies will fail. Simply because, strategic transactions are motivated by a „control factor‟ i.e. the power/authority to change business direction & strategies. This control commands a premium over normal „trading driven‟ valuation approaches.Hence, the Transaction Comparables approach (a.k.a. Precedent Transaction Analysis or Deal Comps) is more popular & relevant here. However, as for all scenarios, one must use other approaches as well to determine a fair value range.

Which valuation method results in the highest Valuation?

Contrary to popular belief, the highest valuation is not driven by the method alone but market conditions & the sector as well. In general, Transaction Comparables include a control premium and hence result in a higher valuation than other methods. Between DCF & Trading Comparables the results will vary depending on. For E.g. When valuing a cement company, DCF is likely to result in a higher valuation as compared to Trading Comparables. However, the case reverses in the IT sector where Trading Comparables seem to „inflate‟ value. This is caused because, the market at large believes that DCF fails to capture value in some sectors while Comparables fail in others.Note: The explanation above should be considered a „Rule of thumb‟ & not a tenet!

In short, Transaction Comparables result in highest valuations. While, in Bull markets Comparables result in higher valuations than DCF. The reverse holds true in Bear markets. Unlike what many believe, DCF does not Inflate value or result in highest value. The so called DCF inflation is a result of errors & unrealistic assumptions as a consequence of over-simplification of the approach

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Equity Valuation FundamentalsWhich method is best suited: Scenarios-wise

Start-ups

Startups are driven by far too many factors to be captured by simplistic valuation models. Their sensitivity to Economic, Sector Specific and Company specific factors must be captured as far as possible to reasonably value them. These factors can only be captured with the DCF method.

Matured Companies

Matured Companies, have fairly predictable financials and hence DCF will result in a fairly reliable valuation. However, the Dividend Discount Model will also work reliably, as matured companies have nominal expansion needs and hence a high dividend payout ratio along with predictability of growth rates.E.g. Large FMCG companies

IPO Valuation

Although, for such situations it is best to use DCF as it determines the intrinsic value, not many will want to use it as it is likely to understate value as against Comparable valuation. Simply because, the idea behind an IPO is to raise maximum possible capital for a minimum dilution in equity! Hence most IPOs come out in bull markets where valuations are already „stretched‟ and Comparable Valuation will result in higher values as compared to DCF, as a result of circularity involved in such the approach. Consequently, you may notice that IPOs are „demand driven‟ rather than intrinsic value led, as a result many average companies get extraordinary valuations!

Distressed Companies

Distressed company valuation, is particularly tricky as the challenge lies in finding fair value and not the lowest value!By distressed, we mean loss making companies or those that are restructuring their businesses by selling off „toxic assets‟ and toning down capital structure. Traditional valuation approaches fail miserably as a result of the uncertainty involved and this is where Liquidation Value & Replacement cost method come to the rescue. Liquidation Value measures return from selling off or liquidating the assets while Replacement Cost measures the opportunity cost of setting up a business. E.g. Many Textile Companies

High Growth Companies

High growth companies have drastically changing market shares and hence it is very difficult to compare them with a benchmark, making comparable valuation difficult and leaving one to go with the DCF approach. E.g. Telecom companies

Cyclical Companies

Cyclical Companies, by virtue, have a very high degree of uncertainty. Secondly, such companies are always on the radar for news & management comment both of which are immediately reflected in Comparables. On the other hand, DCF may have to wait for a quarter or more to reflect a change. E.g. Sugar Companies

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Equity Valuation FundamentalsWhich method is best suited: Sector-wise

Basic materials

Steel & Cement represent basic/building materials. The sectors are cyclical (driven by expansion cycles). Being cyclical, in normal/bullish scenarios Comparables approach is best suited. However, in downturns it is better to shift to Asset based approaches to reflect maximum downside potential.

IT & ITes

IT & ITes companies have very complicated business models where revenues are scattered & unpredictable, face constant threat of protectionism and so one simply cannot have a reliable long term forecast. Hence Comparables is chosen over DCF by most. However, we suggest the use of DCF in very bullish/bearish markets.

Conglomerates / Multi Businesses

SOTP valuation, is not an altogether different valuation methodology but just a combination of two or more traditional ones. The idea being, in case of a multi-business firm, certain business units may be better off valued using DCF while others may be valued using Comparables while some maybe valued with an asset based approach. The result of each, shall be summed-up to determine the value of the firm as a whole. Sum Of The Parts (SOTP) can be used for multiple product lines, multiple business units or multiple subsidiaries. The choice of valuation for each unit must be based on strong rationale, rather than gut feeling (as discussed for the sectors above).

Core Sectors

Infrastructure, Power and Oil & Gas together form the Core Sector. These sectors are primarily driven by government policy and funding, the details of which are clearly made available. Having distinct drivers along with rich data availability make it a perfect DCF candidate. Asset valuation should be used as a support.

Retail

Although appearing to be simple, this is one of the most complicated sectors to value. The complexity is a result of distant breakevens, multiple formats, complex funding provisions (debt/lease/cash) and „not-so-easily-quantifiable‟ demand. This leads to a hybrid valuation approach often called „SOTP‟ Valuation!

Telecom

The Telecom sector, has rich & abundant data availability to generate very reliable numbers over a 3-5 year horizon and the business model can be very easily broken down into a flow of numbers. For this reason it is recommended to use the DCF approach. However, many analysts use Comparables to provide short term targets.

Healthcare / Hospitality

Like telecom, these sectors too can be very easily broken down into a logical flow of numbers resulting in a reliable medium-long term forecast. Hence DCF is a rational choice. However, asset based approaches are a must in bearish markets to determine „worst case scenario‟ valuation

Why do Share Prices Move up?

Why do share prices move up ?There are two broad factors affecting share prices1. Fundamental performance of the company - Growth and quality/sustainability of Cash flows,

excess return over cost of funds (a.k.a. Economic Profit or EVA™)2. Market Sentiments – Market sentiments may be influenced by overall performance of the

Economy, Institutional holding, Government policy, Sector performance, Promoter holding, Management quality etc.

The points above can be combined to suggest that Share prices will move up only when performance (fundamentals) is greater than expected returns (sentiments) Or as Mckinsey calls it ‘Running faster than the expectations Treadmill’

Can we Forecast Sentiments?

Can we forecast sentiments ?No. It is like asking how many people will want to buy/sell a stock at a given point. As mentioned above there are lot of factors affecting sentiments and it is very difficult to understand how the market will react to each such factor. Although, Technical analysts claim to do so, it is yet to be proven and therefore it remains a controversial subject

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Equity Valuation FundamentalsValuation FAQs: General

What about market expectations ?

What about market expectations ?Unfortunately, sentiments drive expectations. At best, a snapshot of market expectations can be taken by getting Consensus estimates (available on popular websites /databases like Bloomberg, Thomson-Reuters etc.) However, one cannot forecast this aspect and hence beating the street remains the biggest challenge for managers!

Any proof that other methods work ?

Any proof that other methods of valuation work ?Yes. According to a study conducted by Tom Copeland (Co author of a bestseller, Former Chicago University Professor, Former Partner at McKinsey & Co. and currently Partner - Monitor group) a correlation of 80% between DCF and Current Market Price exists!

Wealth Maximization or Profit Maximization?

Wealth Maximization or Profit Maximization ?Profits are not the only source of Financial rewards to a shareholder. She may also benefit from capital appreciation as a result of selling her stocks at a higher price. As a result the Profit Maximization motive fails in comparison to Wealth Maximization (includes also sources of wealth)

How does a company create wealth?

How does a company create wealth ?To achieve this goal the company must strive to generate a return over its cost of funds while beating (or at least matching) market expectations ! The spread between the returns over funds and cost of such funds is called Economic Profit.

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Equity Valuation FundamentalsValuation FAQs: General …[Contd]

What does Economic Profit mean?

What does Economic Profit mean ?A.k.a. EVA™ In the equation below, ROIC represents the return on capital while WACC reflects the cost of the same. For a firm to grow and reward its Claimholders its Return on Funds must always be higher that the cost. Economic Profit = (ROIC – WACC ) x Invested Capital

So when does DCF come into the Picture?

So When does DCF come into the picture ?A Discounted Cash Flow Valuation aims to arrive at the ‘Intrinsic Value’ of a company by discounting the forecasted ‘free’ cash flows at a rate = cost of generating such cash flows.

Why Discount Cash Flows and not Profit?

Why Discount Cash Flows ?As discussed, the goal of a company is to generate wealth for its owners (i.e. Shareholders) and not Profit Maximization. The method is based on the belief that ultimately what can be distributed to Shareholders is Cash and hence the phrase ‘Cash is King’.

Why is it considered more scientific?

Why is it considered more scientific ?Shareholder wealth will be maximized as a result of cash inflow through cash/stock dividends and capital appreciation. However, paying dividends implies that the company has lesser internal cash to reinvest as a result it will need to borrow/raise more, causing the Share price to come down by that much. On the other hand Capital appreciation, in the long run is related to company fundamentals. This also explains why growing companies pay less or no dividends as compared to stable/mature ones.

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Equity Valuation FundamentalsValuation FAQs: DCF

Why not discount dividends4 ?

Why not discount dividends4 ?Firstly, Not all companies pay dividends. Secondly, dividends reduce internal cash resulting in a reduction in its Share price (Although for mature companies, as a result of lesser reinvestment needs Dividends are ‘believed’ to increase Shareholder wealth).

4 Dividend Discount Models, although not very popular with practitioners, have their own place when the situation is ‘right’. For e.g. they are popular with investment banks & research firms when it comes to valuing banks and companies that have high payout ratios

Will DCF give an accurate Value per Share?

Will DCF give an accurate value per share ?Value per share as arrived at using DCF is just as good as the quality of Forecasts. Although there are several approaches to scientifically forecast the performance one must remember that a forecast, by virtue is based on certain assumptions, which are specific to every company/analyst. Although companies often aim to standardize such assumptions, they remain just that !

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Equity Valuation FundamentalsValuation FAQs: DCF…[Contd]

Is DCF the best method to arrive at Fair Value?

Is DCF the best method to arrive at Fair Value ?As mentioned earlier, there is no ‘best’ method. Share Prices, in the long run will (and must) revert to fundamental performance of the company in question. However, prices are also driven by sentiments which are not captured in DCF. This is where Comparables come to the rescue, it not only captures sentiments but is also better suited between quarterly results. Hence DCF and comparables are said to be complimentary! The process of triangulation is hence recommended

Should we forecast cash flows directly ?

Should we forecast cash flows directly ?No. Cash Flows are the most important component within the DCF equation and hence the quality of forecasts will ultimately decide the reliability of the Intrinsic Value thus arrived at. • Although Academicians suggest that cash flows must be directly forecasted, such a practice will

yield unreliable results in real world situations. • The lifeblood of a company is Sales and hence it is a very critical item while forecasting cash flows

Secondly a detailed COGS & Capex build up cannot be ignored. Put Simply, Free Cash flows are an outcome of a detailed Financial-cum-business model. Directly forecasting them will result in little credibility to the final output !

What is Discounting?And why must it be used?

What is Discounting? And why must it be used?Discounting flows from the concept of ‘Time Value of Money’. Put simply, it means the value of money deteriorates with time as a result of risk/uncertainty. To determine ‘Present Value’ of a future cash flow we must discount it by the cost of funds raised to generate the cash flows.

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Equity Valuation FundamentalsValuation FAQs: DCF…[Contd]

How is the Discount rate calculated ?

How is the discount rate calculated ?The Estimation (not calculation) of the discount rate firstly depends on the type of DCF method used, following which, one must estimate the opportunity cost of the capital contributors (i.e. depending on the type of DCF method used the discount rate will vary). Following the principle of consistency one must identify all contributors to the specific cash flow model

Methods within DCF ?Methods within DCF ?Contrary to popular belief, all 4 methods within DCF must result in the absolutely same Value per Share. However, capital structure and beta prevent this from happening.Therefore, it is futile to compare/use two different DCF approaches simultaneously.1. Enterprise DCF – The method aims to forecast operating cash flows for firm (i.e. available to all

capital contributors), subtract the Present Value of all Non-Equity items and add back all non-operating excess cash/cash equivalent items. The discount rate hence must be the WACC.

2. Equity DCF – Theoretically the easiest of all, but practically the method poses several challenges and hence loses out to the Enterprise method in popularity. As the name suggests, Cash Flows to Equity holders are calculated and hence discount factor is the ‘Cost of Equity’

3. Adjusted Present Value – Recommended for use in Special situations like LBOs4. Economic Profit Method – Uses EVA™ to‘validate’ the Enterprise DCF approach

What are multiples?What are multiples ?Multiples are ratios used to gauge the degree to which a stock is over/under valued. By themselves, they are of no significance. However, when compared to a set of ‘similar’ companies a lot may be revealed. As mentioned earlier they are used both in Trading and Transaction comparables .• Multiples are of two main types Equity and Enterprise each having its own place• Types of Equity multiples P/E, PE/G, M/B (or P/B) etc.• Types of Enterprise Multiples EV/Sales, EV/EBITDA, EV/EBIT etc.• For Every multiple the numerator must be related to the broader market while the denominator

must be one that reflects a relationship between the company fundamentals and the appropriate numerator. To make things simpler, lets consider the most popular of all multiples – P/E. Now, the numerator is the Market capitalization or Market Value per share i.e. the market value of equity and hence the denominator must reflect what is available to equity claimholders – Net Profit.

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Equity Valuation FundamentalsValuation FAQs: Comparables

How are Multiples used?How are Multiples used ?A sector average (or weighted average ) is calculated as a benchmark on a Last twelve month (LTM) or ‘Forward’ basis, to which the company in question is compared, thus determining whether it is over/under valued. 5

Are they more popular than DCF ?

Are they more popular than DCF ?Yes. The approach, as a result of it’s (believed) ease of application, flexibility and reach is far more popular than any other. However, to make it real world ready it needs some serious research and enhancements to it’s popular avatar! 5 The explanation was a over-

simplification of the actual process

Recommended ReadingBooks1.Mckinsey Valuation 4th Edition – Tim Koller, Marc Goedhart & David Wessels2. Financial Valuation – James R. Hitchner (with contributions from 25+ Authors)3. Investment Fables – Aswath Damodaran (Note: Although, „Investment Fables‟ is a very well written „study‟, we do not recommend Damodaran‟s valuation

approach as we believe it is far too simplistic & fundamentally naive for real world application)

Recommended Articles1. The expectations treadmill – Richard F.C. Dobbs, Tim Koller (Mckinsey Quarterly)2.Do Fundamentals or Emotions drive the Stock Market? – Tim Koller, Marc Goedhart & David Wessels (Mckinsey

Quarterly)3.Equity Analysts: Still too bullish – Marc Goedhart, Rishi Raj & Abhishek Saxena (Mckinsey Quarterly)4. The irrational Component of your Stock price – Marc Goedhart, Bin Jiang & Tim Koller (Mckinsey Quarterly)5.New developments in valuation – An interview with Tom Copeland


Equity Valuation FundamentalsRecommended Reading

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