Applied Equity Analysis: Stock Valuation Techniques for Wall Street Professionals
Applied Equity Analysis treats stock valuation as a practical, hands-on tool rather than a vague, theoretical exercise—and covers the entire valuation process from financial statement analysis through the final investment recommendation. Its integrated approach to valuation builds viable connections between a firm’s competitive situation and the ultimate behavior of its common stock. Techniques explained include EVA, newer hybrid valuation techniques, and relative multiple analysis.
The Statement of Cash Flows
Relative Methods and Companion Variable
The Quirky PriceEarnings Ratio
Valuation of Speculative Stocks
Equity Analysis and Business Combinations
An Alternative to Traditional Analysis
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abnormal earnings abnormal profit accounting acquisition amortization AMZN asset turnover average book value calculation capital costs cash conversion cycle cash flow Chapter CM CM companion variable company's Competitive Strategy competitors cost leadership cost of capital cost of equity debt decline DELL's dividend earnings growth economic Equation equity analyst equity valuation estimates eToys example Figure financial model financial performance financial statements firm firm's flow from operations forecast free-cash flow future gross margin growth horizon growth rate growth stocks Haugen Ibid income statement increase industry interest expense inventory investment investors liabilities market value million net margin NOPAT P/BV multiple payable percent period personal computer PIE multiple Porter potential predicted projected purchase reported return on equity revenue sales growth SOCF stock market stock price stock valuation substantial sustainable competitive advantage Table target price techniques valuation multiples value stocks
Page 76 - A player is your complementor if customers value your product more when they have the other player's product than when they have your product alone.
Page xiv - A Comparison of Stock Price Predictions Using Court Accepted Formulas, Dividend Discount, and P/E Models.
Page 121 - Investment based on genuine long-term expectation is so difficult to-day as to be scarcely practicable. He who attempts it must surely lead much more laborious days and run greater risks than he who tries to guess better than the crowd how the crowd will behave; and, given equal intelligence, he may make more disastrous mistakes.
Page 93 - Strategy is the creation of a unique and valuable position, involving a different set of activities.
Page 63 - The second central question in competitive strategy is a firm's relative position within its industry. Positioning determines whether a firm's profitability is above or below the industry average . . . The fundamental basis of above average performance in the long run is sustainable competitive advantage.
Page 78 - But you don't have to lose as much if you recognize that, once competitors enter the game, you can have win-win interactions with them. It's not all war with competitors. It's war and peace. The same is true in all four directions. Whether it be customer, supplier, complementor, or competitor, no one can be cast purely as friend or foe. There is a duality in every relationship — the simultaneous elements of win-win and win-lose. Peace and war. Friend and Foe There are both win-win and win-lose...
Page 174 - The detailed theory of the interaction of radiation with matter is beyond the scope of this book, but it can be found in most of the books on basic quantum mechanics.
Page 77 - From Co-opetition by Adam M. Brandenburger and Barry J. Nalebuff, copyright © 1996 by Adam M. Brandenburger and Barry J. Nalebuff. Used by permission of Doubleday, a division of Random House. Inc.
Page 122 - A. (2000). Inefficient Markets: An Introduction to Behavioral Finance (Oxford University Press, New York).
Page 87 - A firm differentiates itself from its competitors if it can be unique at something that is valuable to buyers