Equity Valuation: Models from Leading Investment Banks

Contents

Foreword

Preface

Acknowledgments

Abbreviations

Part I Discounted Cash Flow (DCF) ModelsJan Viebig and Thorsten Poddig

1 Introduction

2 The Fundamental Value of Stocks and Bonds

3 Discounted Cash Flow Models: The Main Input Factors

3.1 Analytical balance sheets and free cash flow discount models

3.2 The dividend discount model

3.3 The free cash flow to the firm (FCFF) model

3.3.1 Stirling Homex: why cash is king!

3.3.2 FCFF during the competitive advantage period

3.3.3 Weighted average cost of capital (WACC)

3.3.4 Terminal value calculation

References

Part II Monte Carlo Free Cash Flow to the Firm (MC-FCFF) Models (Deutsche Bank/DWS)Jan Viebig and Thorsten Poddig

4 Introduction

5 Standard FCFF Model

5.1 Net revenues

5.2 Cost structure and operating income

5.3 Reconciling operating income to FCFF

5.4 The financial value driver approach

5.5 Fundamental enterprise value and market value

5.6 Baidu's share price performance 2005–2007

6 Monte Carlo FCFF Models

6.1 Monte Carlo simulation: the idea

6.2 Monte Carlo simulation with @Risk

6.2.1 Monte Carlo simulation with one stochastic variable

6.2.2 Monte Carlo simulation with several stochastic variables

6.3 Disclaimer

References

Part III Beyond Earnings: A User's Guide to Excess Return Models and the HOLT CFROI® FrameworkTom Larsen and David Holland

7 Introduction

8 From Accounting to Economics – Part I

9 From Economics to Valuation – Part I

10 Where Does Accounting Go Wrong?

11 From Accounting to Economics: CFROI

11.1 The basics ...