I don't think that someone has said yet, but it's truly mesmerizing how clear you explain every valuation topic. Not even the content is extremely clear but also the linguistic explanation
Great video, as always. One question on the shares to be used in equity value, I would assume that we use diluted shares outstanding including options using the treasury stock method. But would we use the options outstanding or the exercisable options in treasury stock method. At a first glance, exercisable options seem logical, as these are currently exercisable, but if we include RSU which are not currently exercisable but represent potential future dilution, would it not be sensible to also include outstanding options which also represents future potential dilution? It would be great if you could answer whether to use to options outstanding or exercisable options in the treasury stock method?
Options exercisable if it is a standalone company valuation. The difference is that RSUs eventually turn into real shares without the company having to reach a specific share price, while options do not.
hey i hope this isnt a dumb question but for the revenue for FY2018 where did you find that? Did you just combine all the previous quarters because the annual report wouldnt have come out yet or maybe it did i was just wondering so i can apply it to the companies im doing right now
It depends on when the Fiscal Year ends. In the examples here, some of the companies had FYs that ended in the middle of 2018, so the full reports were available at this time. You can find historical numbers and simple forecasts on sites like FinViz or Yahoo Finance.
5:47 The part about the Peer Group having similar Cash Flows is not 100% accurate in the sense that it is not necessary. By using cash flow proxies like EBITDA and EBIT in the denominator of your multiple, you already account for the cash flow component
Yes, that's true, but the broader point is that the peer companies should have roughly similar financial profiles in terms of overall "size" and risk and potential returns.
How can I be sure that all the LTMs are coherent on covering the same 12 months for each peer, if for example for some companies the Q1 2020 was not released yet?
You can't, just try to make them close enough or use fractions if necessary (multiply by (1/3), (2/3), etc. if quarters mis-align by one month or something like that).
Thank you very much for this great explanation! But I have a question: Why EV is not changed over time? I mean in projected periods we found numbers on Revenue, EBITDA, but Enterprise value and Equity value are given only for LTM and for example when we calculate forward EV/EBITDA we take LTM EV , but projected EBITDA (if I get it right)! So, why EV stands the same?) Thank you in advance!
Awesome video thank you! I have one question though, when I look through data sources the forward estimates can vary a lot, what is the best way to deal with this?
I want to do the projections for FY23 and FY24, but am only getting free figures for FY23, is it ok to use FY22 and FY23 for projections even though FY22 is practically done?
Why have you subtracted "Preferred Stock" and "NCI & Others" from Equity Value for Steel Dynamics to arrive at Enterprise Value? Should they not be added instead?
They are negative numbers. We are adding them, but they're already negative on the company's Balance Sheet (no Preferred Stock, so the NCI is negative due to negative earnings from the sub company over time).
Hey, I’ve just started working in a BB IB (DCM) , any comprehensive course that we have that can help me understand the breadth and knowhow as skill uptake is difficult in a virtual working environment.
Our Premium package includes Excel, PowerPoint, and financial modeling tutorials. It's not specifically geared toward DCM, but you will learn the relevant skills from it.
Hello Team, I have one question like how you have taken 3602.04 (time 11.51). Which multiple you have selected and why ? Basically, I just want to know how to select final multiples like on which basis we need to value like on sales multiple or ebitda like wise..and can you share excel of the same ?
Sorry, I don't understand what you're asking. Certain metrics pair with Equity Value (Net Income), while others pair with Enterprise Value (Revenue and EBITDA).
11:26 multiplying the NI by P/E gives us the price which in this case is the Equity value. Dividing by diluted share count gives us implied share price.
Great video and explained in simple language... Can the excel sheet be shared.? It would be helpful for students to practice and understand the calculation
Excellent !!! Tks Team M&I alot. But I have a question about the meaning of quarttile in CCA ? does it help to narrow the range of Share value? Tks in advance
Great video! Would LTM be calculated using 10K only when theres no 10Q or 8K out for Q1? Also, what are some free resources to see rev/Ebitda/etc forecasts?
I'm confused as to why there is no Price to free cash flow of Rv/FCFF. You literally said that a company's value being Markey Equity and Enterprise Value equals the cash flow. And that the higher the multiple the higher the expected cash flow being free cash flow.
These metrics and multiples are not common in comparable company analysis because they took more time and effort to calculate and are less standardized among different companies, so you start to get problems around the lack of comparability in the individual components of FCF, UFCF, etc. They are useful for analyzing a company in isolation or valuing it but less useful for comparative purposes.
@@financialmodeling I still have one more concern. Thanks for replying btw. So the companies with higher expected fundamentals(net income, Ebit,etc) should have the highest multiple given? When they mean the market is right, they mean to only apply that to peer companies not the target company, right?
@@augustusg857 In theory, yes, but there are many reasons why that may not be true in real life. Yes, the idea is to apply overall market multiples to the subject company.
Files & Resources:
breakingintowallstreet.com/kb/valuation/comparable-company-analysis-cca/
I don't think that someone has said yet, but it's truly mesmerizing how clear you explain every valuation topic. Not even the content is extremely clear but also the linguistic explanation
Thanks for watching!
This channel is teaching IB like a boss 😎🍺
Thanks for watching!
It's a great video and helps me a lot in my work. Thank u so much!
Thanks for watching!
Good tutorials. The tips on the sites too was excellent
Thanks for watching!
Great video, as always. One question on the shares to be used in equity value, I would assume that we use diluted shares outstanding including options using the treasury stock method. But would we use the options outstanding or the exercisable options in treasury stock method. At a first glance, exercisable options seem logical, as these are currently exercisable, but if we include RSU which are not currently exercisable but represent potential future dilution, would it not be sensible to also include outstanding options which also represents future potential dilution? It would be great if you could answer whether to use to options outstanding or exercisable options in the treasury stock method?
Options exercisable if it is a standalone company valuation. The difference is that RSUs eventually turn into real shares without the company having to reach a specific share price, while options do not.
hey i hope this isnt a dumb question but for the revenue for FY2018 where did you find that? Did you just combine all the previous quarters because the annual report wouldnt have come out yet or maybe it did i was just wondering so i can apply it to the companies im doing right now
It depends on when the Fiscal Year ends. In the examples here, some of the companies had FYs that ended in the middle of 2018, so the full reports were available at this time. You can find historical numbers and simple forecasts on sites like FinViz or Yahoo Finance.
hi, do u still provide the excel template for the excel sheet used in the video?
Yes... click "Show More" and go to the links under "Resources."
i think you should deduct cash for calculating enterprise value from Equity value.
??? We always deduct Cash when moving from Equity Value to Enterprise Value, including in these calculations.
5:47 The part about the Peer Group having similar Cash Flows is not 100% accurate in the sense that it is not necessary. By using cash flow proxies like EBITDA and EBIT in the denominator of your multiple, you already account for the cash flow component
Yes, that's true, but the broader point is that the peer companies should have roughly similar financial profiles in terms of overall "size" and risk and potential returns.
How can I be sure that all the LTMs are coherent on covering the same 12 months for each peer, if for example for some companies the Q1 2020 was not released yet?
You can't, just try to make them close enough or use fractions if necessary (multiply by (1/3), (2/3), etc. if quarters mis-align by one month or something like that).
Great tutorial; wish the spreadsheet you were using were available for download so that I can follow along better.
breakingintowallstreet.com/biws/kb/valuation/comparable-company-analysis-cca/ - See the Excel file there
@@financialmodeling Hey - wow, super quick response; and thank you!
Is the LTM data for FY17 in this excel table or is the LTM data for FY16?
The LTM is for midway through FY 16 here. FY 17 is the first projected year as of this valuation date.
Very good. Thx a lot! Also for the hints on which sites to look for data 👍🏻
Thanks for watching!
Thank you very much for this great explanation! But I have a question: Why EV is not changed over time? I mean in projected periods we found numbers on Revenue, EBITDA, but Enterprise value and Equity value are given only for LTM and for example when we calculate forward EV/EBITDA we take LTM EV , but projected EBITDA (if I get it right)! So, why EV stands the same?) Thank you in advance!
Please see: ua-cam.com/video/5D1Ebl01itk/v-deo.html
Very good video - with not only the metrics but where to find them - thanks a lot
Thanks for watching!
Thank you. Great summarization.
Thanks for watching!
very clear concepts. Well explained.
Thanks for watching!
Amazing, keep up the great work!
Thanks for watching!
Can you please share the excel template?
Please follow the link in the pinned comment.
This was so helpful, thank you!
Thanks for watching!
Awesome video thank you! I have one question though, when I look through data sources the forward estimates can vary a lot, what is the best way to deal with this?
Take the average or median.
I want to do the projections for FY23 and FY24, but am only getting free figures for FY23, is it ok to use FY22 and FY23 for projections even though FY22 is practically done?
Yes
Let's get this bread
lmfaoo u dam right
remarkable!
Thanks for watching!
Really constructive
Thanks for watching!
Why have you subtracted "Preferred Stock" and "NCI & Others" from Equity Value for Steel Dynamics to arrive at Enterprise Value? Should they not be added instead?
They are negative numbers. We are adding them, but they're already negative on the company's Balance Sheet (no Preferred Stock, so the NCI is negative due to negative earnings from the sub company over time).
Hey, I’ve just started working in a BB IB (DCM) , any comprehensive course that we have that can help me understand the breadth and knowhow as skill uptake is difficult in a virtual working environment.
Our Premium package includes Excel, PowerPoint, and financial modeling tutorials. It's not specifically geared toward DCM, but you will learn the relevant skills from it.
If I want to value a start-up, how would I pick public companies in term of financial size then??
Take a look at our tutorials on Snapchat and Uber to get some ideas: www.mergersandinquisitions.com/uber-valuation/
Hello Team, I have one question like how you have taken 3602.04 (time 11.51). Which multiple you have selected and why ? Basically, I just want to know how to select final multiples like on which basis we need to value like on sales multiple or ebitda like wise..and can you share excel of the same ?
Sorry, I don't understand what you're asking. Certain metrics pair with Equity Value (Net Income), while others pair with Enterprise Value (Revenue and EBITDA).
11:26 multiplying the NI by P/E gives us the price which in this case is the Equity value. Dividing by diluted share count gives us implied share price.
I'm not sure I understand your comment - are you asking a question about this or pointing something out?
Tha data of steel dynamics, what source? Or is this only estimation? Confused rn
Company filings and our own projections
Great video and explained in simple language...
Can the excel sheet be shared.? It would be helpful for students to practice and understand the calculation
breakingintowallstreet.com/kb/valuation/comparable-company-analysis-cca/
Excellent !!! Tks Team M&I alot. But I have a question about the meaning of quarttile in CCA ? does it help to narrow the range of Share value? Tks in advance
Using 25th, median, and 75th percentile values helps to eliminate outliers.
Great video! Would LTM be calculated using 10K only when theres no 10Q or 8K out for Q1? Also, what are some free resources to see rev/Ebitda/etc forecasts?
Yes. Yahoo Finance, Zacks, see the links in the video.
I'm confused as to why there is no Price to free cash flow of Rv/FCFF. You literally said that a company's value being Markey Equity and Enterprise Value equals the cash flow. And that the higher the multiple the higher the expected cash flow being free cash flow.
These metrics and multiples are not common in comparable company analysis because they took more time and effort to calculate and are less standardized among different companies, so you start to get problems around the lack of comparability in the individual components of FCF, UFCF, etc. They are useful for analyzing a company in isolation or valuing it but less useful for comparative purposes.
@@financialmodeling
I still have one more concern. Thanks for replying btw. So the companies with higher expected fundamentals(net income, Ebit,etc) should have the highest multiple given? When they mean the market is right, they mean to only apply that to peer companies not the target company, right?
@@augustusg857 In theory, yes, but there are many reasons why that may not be true in real life. Yes, the idea is to apply overall market multiples to the subject company.
Excellent stuff!
Thanks for watching!
Awesome.
Thanks for watching!
Can we have access to the excel file?
Click "Show More" and scroll to the resources.
This is really brilliant. Thanks for this - its really awesome!
Thanks for watching!