In my interview today with an Equity Capital Markets Group I was told that you do not need to use DCF, Comparable Company and Precedent Transaction Analysis to value a public company because you simply use Market Capitalization (shares outstanding * price of share). However in my cover letter I discuss a case study I completed in the Breaking Into Wall Street Program where I valued a REIT using a NAV, comparable company, and Precedent Transaction analysis. The REIT is publicly traded so am I incorrect? Does the valuation using different methods make sense?
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I guess technically, the current value of a public company is the market cap. But the purpose of a DCF and other valuation methodologies is to gain a better understanding of what the true intrinsic value of a company is. For example, the value of tesla right now is ~$115B based off the share price. But the intrinsic value could be completely different than its current valuation.
Tbh I would be a bit worried if the group you're interviewing with believes you shouldn't use a DCF or other methodologies. Market cap is useful but its subject to a lot of different factors and can fluctuate significantly...
So whats your opinion on the cover letter? Are those valuation methods used in the case study necessary?
Looks like The Pyschology's comment below probably answers your question better. I am less familiar with ECM so I trust their opinion more haha
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