What Is A Football Field Graph?

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.

To learn more about this concept and become a master at DCF modeling, you should check out our DCF Modeling Course. Learn more here. 

Learn More Here

To learn more about this concept and become a master at valuation modeling, you should check out our Valuation Modeling Course. Learn more here.

Module 1: Introduction

Module 2: Valuation: The Big Picture

Module 3: Enterprise Value & Equity Value Practice

Module 4: Trading Comparables Introduction

Module 5: Trading Comps: The Setup

Module 6: Trading Comps: Spreading Nike (NKE)

Module 7: Trading Comps: Spreading Adidas (ADS.DE)

Module 8: Trading Comps: Spreading Lululemon (LULU)

Module 9: Trading Comps: Spreading Under Armour (UA)

Module 10: Trading Comps: Benchmarking and Outputs

Module 11: Precedent Transactions: Introduction

Module 12: Precedents: The Setup

Module 13: Spreading Tiffany & LVMH

Module 14: Spreading FitBit & Google

Module 15: Spreading Reebok & Adidas

Module 16: Spreading Jimmy Choo & Michael Kors

Module 17: Spreading Dickies & VF

Module 18: Valuation Wrap-Up

Module 19: Bonus: Non-GAAP Practice

Learn More Here

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