What Is A Football Field Graph?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

A football field graph is a graph showing the valuation of a company according to different methodologies. Some of the methodologies used are:

  • DCF
  • Public Comparables
  • Precedent Transactions

The graph will show the different mean valuations and multiples for the different methodologies and allow the person who is conducting the valuation (or most likely their MD) to decide which method to use primarily to achieve the best possible valuation.

Companies are valued using a combination of multiples and future cash flows, and each of these can be taken in a best, worst and median case. For example with a discounted cash flow, you could assume that the company will have a terminal growth rate of x%, x+1% or x-1% and this would give 3 different final values. Therefore, the discounted cash flow method will give a range of values for the company. This applies to all valuation methods (you can trade at a high, low or average multiple of earnings etc.). The best way to show this visually is using a graph, like the one shown below.

This graph shows a variety of valuation ranges based on different methods and multiples. Straight away you can see that the average of all of these gives a share price of around $57, but that you could argue it is worth anywhere from $45 to $85.

Related Terms

Return to the Finance Dictionary

Read Forum Topics About Football Field Graph

Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.