Complete the Valuation Analysis with Discounted Cashflow Valuation and Multiple Valuations of Enterprise Value Mutiple, Price to Earning, and Pricing to Book Value Take the Woolworth Group under Epidemic as an Illustration

DOI

10.2991/978-94-6463-042-8_6How to use a DOI?

Keywords

component; Discounted Cash Flow (DCF) valuation; Enterprise Value Multiple (EVM); Price to Earnings (P/E); Price to Book Value (P/B); Firm valuation techniques

Abstract

The paper analyzes a valuation analysis method that is based on the Discounted Cash Flow (DCF) valuation model and supplemented with other valuation models such as Enterprise Value Multiple (EVM), Price to Earnings (P/E), and Price to Book Value (P/B). To exemplify our methodologies' reliability, practicality, and correctness, we shall utilize the Woolworth Group as an example. We evaluate the expected share price for the balance sheet and income statement data under the same predictions applying these four methodologies in an organized manner. The discounted cash flow model indicates substantial profit potential, and the share price is expected to increase within a few years of the forecast. Similarly, the Enterprise Value Multiple (EVM) model with a multiple-based valuation reveals a favorable comparison to comparable companies, implying an upward trend in the share price. However, an asset-based valuation of the Price to Earnings (P/E) ratio suggests that the company's assets are unlikely to change much. Therefore, the share price is unlikely to move significantly. Simultaneously, the price to book assets ratio model predicts the opposite consequence: a share price decline. Thus, the four models are weighted and averaged to obtain a final Woolworth Group share price valuation. Woolworth's share price is estimated to be $39.51 using the valuation model. The valuation analysis's final conclusion was fairly close to the actual future share price. Therefore, the method's practicality is demonstrated by comparison to the actual future share price.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Yichen Xu
PY  - 2022
DA  - 2022/12/29
TI  - Complete the Valuation Analysis with Discounted Cashflow Valuation and Multiple Valuations of Enterprise Value Mutiple, Price to Earning, and Pricing to Book Value Take the Woolworth Group under Epidemic as an Illustration
BT  - Proceedings of the 2022 International Conference on mathematical statistics and economic analysis (MSEA 2022)
PB  - Atlantis Press
SP  - 28
EP  - 33
SN  - 2352-538X
UR  - https://doi.org/10.2991/978-94-6463-042-8_6
DO  - 10.2991/978-94-6463-042-8_6
ID  - Xu2022
ER  -