Comparing the PBV valuation with DCF valuation

Hi, I'm currently building a valuation model using PBV and DCF analysis and trying to compare the result from both of it. What I have found is that PBV result is likely to be rational than the DCF valuation. ex. the price of the company is 150 and PBV result is around 50 point above or under. The result in DCF valuation is somewhat strange with the result like 200% higher than the PBV result. Is PBV value is the one that I should trust or there is a something that I missing?

2 Comments
 

Hi Luandre-Ezra, check out these threads:

  • DCF Analysis: Why do we use an unlevered Free Cash Flow to Firm, but discount it with the WACC (Levered)? So the title is basically my question. We use the WACC to discount the FCF and I do not completely ... understand why we are using something levered to discount something unlevered! ...
  • DCF with Negative Free Cash Flow positive cash flows it generates. Please correct me if I am wrong. Thanks! Discounted Cash Flow Model with ... Negative FCF If your valuation model has negative cash flow at any point during the projection window, it ... does need to be included in the sum of the discounted
  • Discounting cash flows back to 2015--use mid-year discounting? (mid-2015), do you discount cash flows back to 2015, or do you account for the fact that it's the middle ... of the year? In other words, should you discount back to 2015.5? Thank you all in advance! DCF ... Hey all, quick question about DCF valuation. If you're valuing a company right now ...
  • Valuation under Discounted cash flow I am little confused on DCF Valuation. I did a valuation of a cash inflow for 2 years and terminal ... value cash flow at the end of 2nd year. I arrived at "x" value. Now by just increasing ... forecast period how can we increase value of organisation. The increase in value is equal to PV of cash ...
  • Discounted cash flow (DCF) Hello everybody, I cannot understand 2 questions so far in DCF valuation: 1) Why cash which is ... has a great amount of cash, the DCF method ignore such fact and in my opinion get lower company value ... than it should be. In my opinion, we should add outstanding cash to discounted FFCF of the company to ...
  • Value Company With Negative Free Cash Flows of the valuation. Read more about how to do a discounted cash flow analysis. Comparable Analysis with ... a discounted cash flow analysis. Intrinsic Valuation with Negative FCF If you are doing a discounted cash flow ... analysis- you can pro
  • Why is WACC used as discount rate at which I think I could get if I had money today. If a DCF is trying to discount future cash flows ... returns/cash flows. If you had all of "the money" today, and you invested in a portfolio of those ... , why would you use the rate at which a company borrows money (WACC) as your discount
  • More suggestions...

Fingers crossed that one of those helps you.

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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