Getting to a Share Price (for HF cases)
I’m in the position where I’m getting into some processes and need to get ready for cases. Might be an elementary question, but confused on one point - let’s suppose you get the case, build the bare bones income statement + a few needed balance sheet & CFS statements, and can get an EPS. How do you get to an actual share price target? Especially given limited time (think a 4 hr live case for MM)
Assuming you don’t get a comps table or don’t have tools for a full blown DCF (no beta for cost of equity, no credit rating info, etc.).
multiply by the multiple to get EV and then excl net debt / DSO
What if they don’t provide a multiple / peer multiple (EV/EBITDA)?
Is there some way to use the current P/E (assuming they give you current price)
You’ll have to use your gut / prior industry knowledge. If you know what the S&P is trading at, if it is a consumer staples or software company obviously knowing what type of valuation to use, and have some credible argument behind your assumption, you will be fine. No one ever got the job b/c they pitched the exact multiple the reviewer wanted to see, it is always more about your process and how you apply it to limited information.
No BBG API in the Excel file?
Maybe can try the current P/E multiple unchanged and your forward EPS. Or 1x PEG ratio on your EPS CAGR to get some indicative P/E multiple check.
You need experience to really understand where stocks trade just by looking at growth, volatility, margins, capital intensity, roic, perceived riskiness, etc
There are lots of multiple decompositions stuff out there you can use too.
You can probably tell what kind of a business it is just by looking at its financials
Vitae est architecto possimus. Quo eos minima iure non quidem omnis. Vel aut dolores reiciendis voluptate natus ipsum. Nesciunt optio ut autem et placeat. Consequatur occaecati nostrum consequatur temporibus ipsam. Ut delectus ducimus molestias inventore perspiciatis voluptatem. Aut aut sequi ut recusandae qui tempore magnam dolore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...