Valuation Methods: The Valuation Matrix By Aswath Damodaran

1224 Words3 Pages
bulb-icon

Recommended: Corporate Finance II

Ref: www.infrontanalytics.com

Valuation Methods;
Net Asset Value (NAV)
NAV is the book value of equity.
Net Assets = Total Assets – Total Liabilities = Total Equity (the shareholders’ funds)
(All values are taken from the balance sheet, see appendix.) (Total Non-Current Assets – Other Non-Current Assets) – (Total Current Liabilities + Total Non-Current Liabilities) (66,009 – 46,256 = 19,753 M) ˉ ( 18,547 + 19,188 = 37,735 M)
NAV = $19,753 M - $ 37,735 M
NAV= - $17,982 M

Net Asset Value Per Share (NAVPS)
Net Asset Value ÷ Shares Outstanding, diluted average (Ref: statement of earnings 2017 10k, page 59)
-$17,982 ÷ 1078.5 = - $16.67 …show more content…

The Valuation Matrix by Aswath Damodaran Ref:http://people.stern.nyu.edu/adamodar/pdfiles/execval/relval.pdf
Ref: http://people.stern.nyu.edu/adamodar/pdfiles/country/relval.pdf

P/E Ratio = Share Price / Earnings per share diluted (TTM)
= 72.90 / 3.62 = 20.14 or
P/ Ratio = Market Cap (M) / Revenue/ E Ratio can be thought of as time taken by WBA to earn back price paid for stock. Current P/E is less expensive than its 5-year average of 22.09.WBA in line with industry, CVS has advantage as P/E is lower, but WBA will have advantage due to imminent growth phase after Rite Aid acquisition. Ref: https://www.infrontanalytics.com/

P/S Ratio = Share Price / Revenue per share …show more content…

Price/Book Value = Market Value of Equity/Book Value of Equity.
= 73.08 / (BV per share for quarter ending Nov’17) 26.18
=2.79
The price/book value ratio is the ratio of the MV of equity to BV of equity, i.e., the measure of shareholders’ equity in the balance sheet.
The current P/BV is slightly less than its 5-year average and less than industry. It is indicative of the stock value relative to underlying assets within WBA.
WBA acquisition activity, combined with market raising alarms around possible entry by Amazon into pharmacy industry affect stock price.

PFCF = Share Price/ FCF per share (TTM)
= 73.08/ 5.919
= 12.49
FCF for WBA has reduced significantly due to recent events cited earlier. It is still better than CVS and understandably the diminished Rite Aid Corp.
Wal-Mart is classed as a comparable although it is a drug store chain, it is also a global food retailer which demonstrates that valuation by ratios/multiples is less than relative. Many stocks included in WBA’s industry are not trading on a global scale as it, CVS and Walmart do. This ratio can be misleading as it can

Show More
Related

  • Analysis Of Wendy's Corporation And Bob Evans Farms

    1011 Words  | 3 Pages

    This requirement makes it important to look through a majority of the return ratios, which include return on sales, return on assets, and return on equity. Additionally, investors are also interested in the ratios related to the company’s earnings, such as earnings per share (EPS) and PE ratio. Looking at return on sales, we can see that Wendy’s has a 7.27% return on sales and Bob Evans has a 1.23%, which demonstrates Wendy’s has a higher profit margin. Moreover, Wendys’ return on assets is 2.85% and Bob Evans is 1.58%. Also, Wendy’s and Bob Evan 's have return on equity ratios of 6.66% and 4.30%, respectively. All of these return ratios show that Wendy’s has a better handle on turning working capital into revenue. On the other hand, although Wendy’s return ratios are higher than Bob Evans, Bob Evans has a better performance on earnings per share and PE ratio. This is due to Bob Evans having less common stock share outstanding, which makes their earnings per share and PE ratio higher than Wendy’s. Due to the EPS being higher for Bob Evans, we would recommend that investors look towards Bob

    Read More

  • Company Financial Analysis: BMO Life Insurance Company

    728 Words  | 2 Pages

    Using the 5 different ratio analysis used earlier to analyse BMO life insurance company’s Q2-2015 Consolidated Income statement and Q2-2015 Consolidated Balance sheet. BMO’s profit margin is 9.79%1. Meaning BMO earns more net income per $1 of sales than some or even most of its competitors. This can be rated as favorable in comparison to its industry average of 9.58%. BMO’s days’ sales uncollected is 21.84days2 favorable when compared to its industry’s average of 98.59 days. This means that BMO can liquidate it receivables in lesser days than some or most of its competitors. BMO’s equity ratio shows that the owners of the company only owns 10.66%3 of the company’s assets. Compared to its industry

    Read More

  • Rite Aid Stock Analysis

    540 Words  | 2 Pages

    I chose to analyze the third largest retail drugstore chain in the United States, Rite Aid Corporation. I chose to analyze Rite Aid Corp. because our family owns approximately 1200 shares and we have taken quite a loss on our investment. We are in the process of deciding whether or not we should sell our stock. Additionally, my Mother has been a pharmacist at Rite Aid Corp for 11 years and she often pays close attention to the financial stability of the company. We both feel that when you are employed by a corporation, that the corporation should be financially stable. A financially secure employer is one who generally offers better compensation and advancement to its employees.

    Read More

  • value

    1823 Words  | 4 Pages

    Clearly, the current share price of $13.89 is deeply undervalued. The fair stock value of $26.94 has been conducted by including tax-shield, on/off balance sheet value and the value of un-mined gold, however this result is based on number of assumptions.

    Read More

  • Financial Analysis Of The Financial Position Of British Petroleum

    1748 Words  | 4 Pages

    From the table 3 it is indicated that the current ratio of British Petroleum is higher than one both in the recent financial statements i.e. of 2014 and in the financial statement of previous year i.e. of 2013. In 2013 the current ratio of British Petroleum is 1.33 which indicates that the company has sufficient current assets to satisfy it short term liabilities. However, the current ratio in 2014 is 1.37 (BP Global, 2014) indicating increase and depicting that is in position to satisfy its short term debts. Thus this indicates the strength of company in satisfying its debt.

    Read More

  • Comprehensive Problem: Sun Microsystems

    1139 Words  | 3 Pages

    Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets.

    Read More

  • The Marketing Environment: Wal-Mart Corporation

    1488 Words  | 3 Pages

    Wal -Marts' major competitors are the Kroger co. #2 in annual sales, Albertsons' Inc. #3, Safeway,Inc. #4, and Costco Wholesale Group #5. Now even though Wal- Mart is leading the way in total sales the #2 and #3 businesses lead in way with total # of stores. The Kroger Co. has 3,302 with Albertsons at 2,476 stores nationwide. Wal-Marts total sales for that year alone was beating its 2nd place competition alone by more than 80 billion dolla...

    Read More

  • Walmart Essay

    893 Words  | 2 Pages

    Many employees claim low wages, no benefits, irregular schedules, and unreliable hours as some of the horrible working conditions they have to endure. Walmart employees put together different unions all the time to try and protest or strike about the wages, treatment and anything else that seems to come along with being an employee of Walmart. Walmart does not take well to these unions. Women of Walmart seem to have it the hardest though. As recently as 2013, despite the fact that women account for as much as 57 percent of Walmart’s U.S. workforce, women were paid $1.16 less per hour (Osterndorf). In an article about Walmart and how it treats employees wanting to take sick days, a woman in fear of losing her job at a North Huntingdon Walmart, went back to work even though she had doctors' notes and hospitalization recorded, which were both rejected by her supervisors, to excuse her from work due to a miscarriage. She was worried the she would get fired due to absences so she went back (Abrams). Walmart also does not give out good health care to its employees. There are many claims of Walmart cutting health care for employees or finding the cheapest possible solution for an employee's health care. In 2014, the company cut insurance benefits to its part-time employees (Osterndorf). In a New York Times article about health care called, Walmart to End Health Coverage for 30,000 Part-Time Workers, it stated

    Read More

  • Wal Mart and Target Case Study

    1124 Words  | 3 Pages

    Team B's assignment this week was to select two different publicly traded companies in the same industry. The two companies will serve as the basis for subsequent team assignments. The two companies chosen for study are Wal-Mart and Target. This paper will provide an overview of each of the selected companies.

    Read More

  • Discounted Cash Flow Valuation

    1092 Words  | 3 Pages

    ...ow valuation has been correctly calculated to show the projected future cash inflow will greater than the present value of the company asset.

    Read More

  • Financial Ratio Analysis Report Of Ford Motor Company

    1668 Words  | 4 Pages

    Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.

    Read More

  • Financial Analysis Of Rolls-Royce's Financial Ratio Analysis

    1377 Words  | 3 Pages

    The ratio of 1.7 for the last two years indicates consistency, although a lower number is preferred. As a company produces high value product, this could be a satisfactory ratio. By comparing it to 2011 when a ratio was 2.9, in the last two years a ratio improved

    Read More

  • Home Depot's P/B Ratio

    442 Words  | 1 Pages

    With that said, LOW’s P/B ratio has risen, but not as significantly as Home Depot. This tells you that LOW’s performance is not as impressive as Home Depot, albeit, significantly better than the SPX average. LOW’s P/B ratio signifies less investor confidence. A low of 1.3 in 2012 has risen to a high of 1.65 which is the current TTM. LOW’s P/S ratio has averaged 1.08 since 2012.

    Read More

  • Financial Ratio Analysis

    1415 Words  | 3 Pages

    Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

    Read More

  • Importance Of Balance Sheet

    1176 Words  | 3 Pages

    In classified balance sheet categories of assets are: current assets, investments, fixed assets, intangible assets, etc.

    Read More

More about Valuation Methods: The Valuation Matrix By Aswath Damodaran

Open Document