For the target price: rather use DCF or a multiple?
Would you say using a DCF or a multiple (P/E, EV/EBITDA, etc.) is more common nowadays?
I feel like a DCF is way too subjective and can be manipulated greater
Would you say using a DCF or a multiple (P/E, EV/EBITDA, etc.) is more common nowadays?
I feel like a DCF is way too subjective and can be manipulated greater
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Multiples are much more common. While DCF is theoretically sound, it's not the best way to communicate a company's valuation without going through all your assumptions. Multiples are a language that everyone speaks.
Most SS ER price targets are for a year out which isn't exactly conducive to a DCF
Multiples in my opinion are actually very sensitive to all sorts of distortions: rumours about a take-private, bear/bull markets, etc. Would always do a DCF, at least as a sanity check.
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