This 26-session equity valuation class will be taped starting January 28,
2008, and the lectures will be available as Real Player files (You can
download Real Player for free by going to http://www.real.com).
You can get the supporting lecture notes by clicking on the pdf files
below - the pages covered by each lecture are provided next to each
lecture. The
quality of the video and audio leaves much to be desired but it will
get better over time. For the syllabus and other details, visit the home
page for the class.
Introduction to Valuation
Part
I: Discounted Cashflow Valuation (276 pages). If you prefer two
slides per page, click here. (Updated for Spring 2008 class)
Part
II: Relative Valuation and Private Company Valuation (186 pages) (If
you prefer two slides per page, click
here) (Updated for Spring 2008 class)
Part
III: Real Options, Acqusition Valuation and Value Enhancement (186 pages) If
you prefer
two
slides per page, click here.(Updated for Spring 2008 class)
Part
IV: Closing Presentation
This page will include the webcasts from the current class. The prior semester's webcasts can be found here.
| Session (Click here) | Topics covered | Lecture notes |
| 1 (1/28/08) | Introduction to Class Approaches to Valuation |
Syllabus for class |
The essence of DCF valuation The essence of Relative valuation The essence of Real Options DCF Valuation: First steps |
Packet 1: 1-10 |
|
Weekly challenge # 1 |
Reconciling firm and equity valuation | Weekly challenge #1 Solution |
Setting the table for DCF valuation |
Congoleum cashflow page Packet 1: 11-24 |
|
Equity Risk Premiums - Historical premiums and problems - Country Risk Premiums - Company exposure to country risk - Implied Equity Premiums |
Packer 1: 25-45 | |
| Weekly Challenge # 2 | Estimating country risk premiums (or) |
Country premium challenge and solution Implied premium challenge, data and solution |
Closing thoughts on the equity risk premium Betas - The problem with regression betas - A "perfect" beta - Alternatives (Bottom up betas) |
Packet 1: 46-61 |
|
Closing thoughts on cost of equity The cost of debt Weights in the cost of capital First steps towards cash flows |
Packet 1: 62-84 |
|
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge Solution |
Adjusting for operating leases |
Packet 1: 84-103 |
|
Working capital estimates and forecasts Free Cashflow to Equity Estimating Growth - Historical growth rate - Analyst estimates of growth - Fundamental growth in EPS |
Packet 1: 104-134 |
|
Take the first quiz and check out the solution as well as the distribution of grades for the class. More on fundamental growth |
Packet 1: 135-148 |
|
| Weekly Challenge # 4 | Estimating fundamental growth | Weekly challenge Solution |
Terminal value - ConstrainLoose Ends in Valuation - Dealing with cash - Valuing cross holdings - Other assets? - The cost of complexityts on growth - Length of growth period - Excess returns and consistentcy Picking the right model |
Packet 1: 149-164 |
|
|
Packet 1: 165-181 |
|
| Weekly Challenge # 4A | Terminal Value Mechanics | Weekly challenge Solution |
Dealing with Debt Management Options Valuation Examples - Dividend discount model |
Packet 1: 182-205 |
|
More dividend discount valuation |
Packet 1: 206-225 |
|
Information and Value Dilution and Value Distress and Value |
Packet 1: 226-256 |
|
| The Dark Side of Valuation - Valuing young companies Dealing with uncertainty in DCF valuation Relative Valuaton: Introduction |
Packet 1: 257-276 Packer 2: 1-4 |
|
| Weekly Challenge # 5 | Dealing with management options | Weekly challenge Solution |
| Weekly Challenge # 6 | Circular Reasoning in DCF valuation | Weekly Challenge Daimler valuation Solution |
Take the second
quiz and check out the solution as
well as the distribution of
grades for the class. Deconstructing Multiples: The four basic steps |
Packet 2: 5-16 |
|
The determinants of PE The perfect undervalued company Examples |
Packet 2: 17-44 |
|
PEG Ratios EV Multiples EV/EBITDA |
Packet 2: 45-83 |
|
| Weekly Challenge # 7 | Analyzing the PEGY ratio | Weekly challenge Solution |
More on EV/EBITDA Book Value Multiples Revenue Multiples |
Packet 2: 84-124 |
|
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
Multiples in "young" sectors Multiples with distressed companies Picking the right multiple Valuing private businesses - introduction |
Packet 2: 125-159 |
|
More on private businesses - Total betas and
Illiquidity Discounts Valuing private companies for sale to publicly traded companies Valuing for an initial public offering Introduction to Real options |
Packet 2: 160-189 Packet 3: 1-5 |
|
Take the third
quiz and
check out the solution as
well as the distribution of
grades for the class.
Basic Questions about Real Options The Option to Delay |
Packet 3: 6-28 |
|
Patents as options Natural resource options The option to expand |
Packet 3: 29-55 |
|
The option to abandon Financial Flexibility as an option Equity in Deeply Troubled firms |
Packet 3: 56-96 |
|
| Aquirer's Anonymouns: Seven Steps to Sobriety - Background on Acquisitions - Common Errors in acquisition valuation |
Packet 3: 97 - 133 |
|
Value Enhancement - Value versus Price Enhancement - Ways of enhancing value - The expected value of control |
||
Take the final
exam and
check out the solution as
well. If you are so inclined, check out the distribution. |
||