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Equity Valuation Models

PV models, Multiplier models, and Asset-based models used for estimate of intrinsic value

Present Value Models

Estimate intrinsic value as the present value of expected future benefits

Multiplier Models

Estimate intrinsic value based on a multiple of some fundamental variable

Asset-based Valuation

Estimate intrinsic value based on the estimated value of assets and liabilities

Dividend Discount Model

V(0) = sum of D(t)/(1+r)^t {assuming going concern -- perpetuality -- constant required rate of return}

Free-Cash-Flow-to-Equity (FCFE) Valuation

FCFE is a measure of dividend-paying capacity, and can be used for stocks no paying dividends

Preferred Stock Valuation

V(0) = D(0)/r {for perpetual}

Gordon Growth Model

V(0) = [D(0)x(1+g)]/(r-g), where g = b x ROE

Multistage Dividend Discount Models

V(0) = sum of [D(0)x(1+gs)^t]/(1+r)^t + V(n)/(1+r)^n

P(0)/E(1) =

P/E Multiplier Model