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1:53 am
February 9, 2010
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Jae Jun
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because you are not calculating what the company is worth by guessing the growth rate.
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10:18 pm
February 8, 2010
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zehua
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Jae Jun said:
Remember that valuation methods are tools, and not rules. You have to know which one to use for which company. No two company is ever the same and therefore there will always be differences.
DCF and Graham both include a growth factor which includes future estimates into the intrinsic value, but EPV is just a snapshot of the company in its current state. There is no growth included in the EPV which is why it usually comes out lower.
Then why does EPV claim to be more suitable for growth and cyclical companies?
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11:13 pm
February 7, 2010
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Jae Jun
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Remember that valuation methods are tools, and not rules. You have to know which one to use for which company. No two company is ever the same and therefore there will always be differences.
DCF and Graham both include a growth factor which includes future estimates into the intrinsic value, but EPV is just a snapshot of the company in its current state. There is no growth included in the EPV which is why it usually comes out lower.
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8:53 pm
February 7, 2010
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zehua
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Same problem happens with PRGN, when Graham and DCF are pretty close around $12 but EPV is a minus $22.
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8:12 pm
February 7, 2010
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zehua
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Hi Jae,
I found DSX to be a good growth company with good gross margin. The DCF and Graham valuations are $33 and $35 seperately, when I apply growth of only 13% when clearly this company is growing much faster than that.
Then when it comes to EPV, the reproduction cost is $12 and the EPV is only $10 after I adjusted the normalized adjusted income from 107 to 160. This seems pretty odd to me. Could you please tell me if there is anything wrong with my analysis? How does the EPV valuation fair with growth companies, as clearly the last few years of the net income will be significantly higher than previous years?
Thanks,
Zehua
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