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Stock Valuation An Essential Guide to Wall Street's Most Popular Valuation Models

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ISBN-10: 0071452249

ISBN-13: 9780071452243

Edition: 2006

Authors: Scott Hoover

List price: $91.00
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Description:

A critical, practical look at the five stock valuation models most widely used by Wall Street Based on insights from the author's unique access to top investors, including legendary mutual fund manager Bill Miller of Legg Mason Describes problems and limitations behind commonly used valuation models and how readers can plan for them
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Book details

List price: $91.00
Copyright year: 2006
Publisher: McGraw-Hill Education
Publication date: 1/5/2006
Binding: Hardcover
Pages: 400
Size: 6.30" wide x 9.10" long x 1.34" tall
Weight: 1.496

List of Figures
Preface
Acknowledgments
Setting the Stage
Purpose and Scope
Who Values Stocks?
Corporate Managers
Financial Analysts: Investment Banking
Financial Analysts: Equity Research
Asset Managers
Individuals
Economic Policymakers
The Objective of Equity Investment
Related Concepts
Earnings vs. Cash Flow
Good Companies vs. Good Stocks
Size Matters
Growth vs. Value
Few Stocks vs. Many Stocks
Broad-Based Portfolios vs. Concentrated Portfolios
The Investment Process
Market Selection
Class/Industry Selection
Asset Selection
Organization of the Book
Case Study: O'Charley's
Price Formation, Market Efficiency, and Great Investors
Purpose and Scope
How Are Prices Determined?
Types of Orders
Dealer Markets
Auction Markets
What Have We Learned about Price Formation?
Market Efficiency
The Evidence
A Few of the Great Investors
The S&P 500!
Warren Buffett
Peter Lynch
Bill Miller
Putting It All Together
In Practice ...
Case Study: O'Charley's
The Time Value of Money
Purpose and Scope
In Theory ...
The Discount Rate
Multiple Cash Flows
Implied Discount Rates
In Practice ...
Expressing Interest Rates
Application: Retirement Planning
Summary
Understanding Financial Statements
Purpose and Scope
Financial Statements
The Balance Sheet
The Income Statement
The Statement of Cash Flows
Linkages Between the Statements
Building the Free Cash Flow Equation
Sales and Cost of Goods Sold: Implications for Free Cash Flow
Dealing with Capital Expenditures and Depreciation
Cash
The Free Cash Flow Equation
Other Cash Flow Items
In Practice ...
Nonsynchronous Financial Statements
Differences in Terminology and Reporting Structure
Case Study: O'Charley's
A Note on SFAS No. 123R
Summary
Interpreting Financial Statements
Purpose and Scope
In Theory ...
Common Size Financial Statements
Indexed Financial Statements
The Turnover Balance Sheet
The DuPont Method
Special Ratios
Unused Assets
In Practice ...
Identifying Misleading Items
Case Analysis: O'Charley's
Case Study: Applebee's
Summary
Capital Structure and the Cost of Capital
Purpose and Scope
In Theory ...
The Pecking Order Theory
Internal Financing
External Financing
Signaling Effects
The Cost of Capital
In Practice ...
Problems with Estimating the Cost of Debt
Problems with Estimating the Cost of Preferred Stock
Problems with Estimating the Cost of Equity
Problems with Estimating Weights for the WACC Calculation
Case Study: O'Charley's
Summary
Forecasting
Purpose and Scope
In Theory ...
Growth from Retained Earnings
The Forecasting Process
In Practice ...
Case Study: O'Charley's
Summary
Valuing Employee Stock Options
Purpose and Scope
In Theory ...
The Black-Scholes Option Pricing Model
Valuing Yet-to-Be-Issued Employee Stock Options
In Practice ...
A Note on Dilution-Based Approaches
Different Contracts and Lack of Complete Information
Early Exercise
Case Study: O'Charley's
Summary
Relative Valuation and Screening
Purpose and Scope
In Theory ...
A Note on Model Error
Screening
Comparables ("Comps") Analysis
Discounted Dividends and the Malkiel Model
A Relative Version of the Malkiel Model: Growth-Adjusted Comps
In Practice ...
Equity Research and Investment Banking
What Stocks Can We Include?
Outliers
Analyst Growth Rates
Case Study
Summary
The Discounted Cash Flow Model
Purpose and Scope
In Theory ...
The DCF Model
In Practice ...
Case Study
Other Recommended Readings
Bibliography
Index