The Art of Company Valuation - Complete course

We will be starting the absolute valuation lectures by introducing the concept of market capitalization and the quick & very interesting cash to market capitalization test.

Book value has been for decades used by value investors to identify undervalued companies. In this lecture, we will explain how book value is calculated and more specifically introduce the price-to-book value test that is often used by value investor amongst other valuation tests to see if the market is undervaluing or overvaluing a company.

Adjusting assets and by that book value of a company requires first of all a general understanding of IFRS vs US GAAP accounting standard differences. In this lecture I will also showing how materiality threshold on assets allows a quick selection of the main assets to revaluate potentially.This lecture is an introduction lecture before going deep into the 3 types of asset classes we will be analysing in the next leture.

This lecture is a pretty long lecture where we will be practicing asset value adjustments on financial instruments, PP&E and trademarks. I will show you at the end of the lecture how the value adjustment of those assets has a direct impact on the book value of the company.

The last lecture in this chapter about asset based valuation is dedicated to calculate the liquidation value of a company. Liquidation may happen when the business owners decide to stop operating or when a fire sales/emergency sales scenario may be required. Similar to the price to book value, I will teach how to interprete price to liquidation value.

Multiple revenue & earnings method are the 2 first methods related to going-concern valuation. In this lecture I will show you how to determine over/undervaluation of a company based on earnings & revenue multiples and where to look for those multiples (DVI, Pepperdine, Aswath Damodaran).

Free Cash Flow to the Firm also commonly known as Discounted Cash Flow is one of the most important tools for determining the intrinsic value of a company. While book or adjusted book value gives you a sense of what the company is worth on its current assets, FCFF/DCF allows to determine the value of a company based on its future earnings. In this lecture we will also be adressing how to determine cost of capital based on industry risk, credit risk spread and country risk spread.

In this last lecture of going-concern valuation, I will be looking at Free Cash Flow to Equity valuation methods starting with Dividend Discount Model & Gordon Growth. We will be finalizing with Total Shareholder Yield which includes share buybacks as buybacks became more & more popular since the early 2000s.

In this lecture I will starting first by explaining under which circumstances relative valuation is interesting. The 2nd part of the lecture will be about Price To Book relative valuation.

Price to Cash Flow is a very similar relative valuation method to Price to Earnings. We will be discussing Price/Operating Cash Flow but also Price/Free Cash Flow and how to interprete the relative valuation calculation.

Price to Earnings ratio (also known as P/E) is one of the most known and commented relative valuation ratios on the market. In this lecture we will be looking at P/E but also explaining Forward & Trailing P/E.

The last price-to relative valuation ratio I will be discussing is Price-to-sales. In this lecture I will be explaining how to interprete P/S and in which narrow scenario P/S may make sense (growth companies).

PEG (Price to Earnings to Growth ratio) is a very similar relative valuation ratio compared to P/E with the advantage that it brings in growth assumptions into the calculation. In this lecture I will explain how to calculate & interprete the PEG ratio.

Entreprise Value relative valuation is used in combination with EBIT, EBITDA and Sales as a relative valuation measure. I will explain in this lecture how EV is calculated, comparing it to market cap, P/E, PEG and establishing EV/EBIT for the 4 companies we are consistently practicing during the course. I will also introduce EV/Sales as a relative valuation measure, similar to multiple-revenue method we saw earlier in this course.

In the first lecture of special valuation situations, I will be introducing the main concepts of merger & acquisitions, which methods are typically used in M&A situations and also explaining the important concept of goodwill (balance sheet asset) in the context of M&A.

This lecture will elaborate on which valuation methods to use depending if you are a VC investor, private equity or public equity investor. We will discuss which valuation methods are used by investing professionals in those 3 areas.

The switch for a company from private equity to public equity happens through Initial Public Offerings (IPO) or Direct Public Offerings (DPO). In this lecture, I will be discussing on the examples of Fitbit, GoPro & ETSY how to look into IPO/DPOs and looking back at the IPO performance for those 3 companies. The lecture will close with an analysis/brainstorm if the IPO performance of those 3 companies could have been predicted.

Banks are a special valuation category. I will explain what is special about banks and how book value & FCFE are better valuation methods for banks vs more traditional FCFF methods.

In this lecture, I will explain how to understand company valuation that have multiple share classes with similar par values and with diverging par values. We will discuss in depth Petrobras & Berkshire Hathaway examples.

This is the closing lecture where I summarize again what we have seen together during the whole course.

Appendix 1 covers the companion datasheet