What Is Equity Value?

Equity Value is another term for Market Capitalization. It comes in two forms:

  • Basic Equity Value - Share Price x Basic Shares Outstanding
  • Diluted Equity Value - Share Price x Diluted Shares Outstanding

The only difference is the number used for Shares Outstanding. Diluted Shares Outstanding is Shares Outstanding including any dilution from options, convertible bonds etc. Although Equity Value is one of the most commonly quoted numbers when talking about the value of a company, it is actually not that useful as Enterprise Value reflects a far truer value. Equity Value is used in conjunction with Free Cash Flow as a valuation ratio though.

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

Related Terms

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