This 26-session equity valuation class will be taped starting January 22,
2007 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 2007 class)
Part
II: Relative Valuation and Private Company Valuation (228 pages) (If
you prefer two slides per page, click
here) (Updated for Spring 2007 class)
Part
III: Real Options, Acqusition Valuation and Value Enhancement (172 pages) If
you prefer
two
slides per page, click here.(Updated for Spring 2007 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 (1/22/07) | Introduction to Class Approaches to Valuation |
Syllabus for class |
| 2 (1/24/07) | Approaches to Valuation (continued) Discounted Cashflow Valuation: Equity versus Firm |
Introduction to Valuation Packet 1 (1-8) |
| Weekly Challenge # 1 | Reconciling firm and equity valuation | Weekly challenge Solution |
| 3 (1/29/07) | More on firm vs equity valuation The Riskfree Rate Historical Risk Premiums Country Risk Premiums |
Kennecott cashflow exhibit Packet 1 (9-31) |
| 4 (1/31/07) | Company Exposure to country risk Implications for multinationals Implied Equity Risk Premium Introduction to Betas |
Packet 1 (32-56) |
| Weekly Challenge # 2 | Estimating country risk premiums (or) |
Country
premium challenge and solution Implied premium challenge, data and solution |
| 5 (2/5/07) | Bottom up Betas Cost of Debt Weights for Cost of Capital Dealing with hybrids |
Packet 1 (57-80) |
| 6 (2/7/07) | Getting earnings right |
Packet 1 (81-98) |
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge Solution |
| 7 (2/12/07) | Reinvestment needs - Cap ex and working capital Debt cashflows and Cash flow to Equity Historical Growth Rates |
Packet 1 (99-120) |
| 8 (2/14/07) | Take the first quiz and check out the solution as well as the distribution of grades for the class. Analyst Estimate of Growth |
Packet 1 (121-139) |
| 9 (2/21/07) | Fundamental growth in Operating Income Revenues and Margins: High Growth Firms The terminal value computation |
Packet 1 (140-162) |
| Weekly Challenge # 4A | Terminal Value Mechanics | Weekly challenge Solution |
| Weekly Challenge # 4 | Estimating fundamental growth | Weekly challenge Solution |
| 10 (2/26/07) | Terminal Value Dynamics Loose Ends in Valuation - The value of cash - The value of cross holdings - Other Assets - Complexity |
Packet 1 (163-180) Growth and Value (McKinsey article) |
| 11 (2/28/07) | Loose Ends in Valuation (continued) - Complexity (contd) - What is debt? - Management Options and Restricted Stock |
Packet 1 (181-206) |
| Weekly Challenge # 5 | Dealing with management options | Weekly challenge Solution |
| 12 (3/5/07) | Valuation Examples - Dividend Discount Model and Implied Growth Rates - Valuing the entire market - FCFE Models and Emerging Market Risk |
Packet 1 (207- 237) |
| 13 (3/7/07) | More on FCFF Models - Circular Reasoning in DCF models - The value of corporate governance - Valuing distresssed companies - Valuing young companies |
Packet 1 (238- 267) |
| Weekly Challenge # 6 | Circular Reasoning in DCF valuation | Weekly Challenge Daimler valuation Solution |
| 14 (3/19/07) | Valuing Amazon and Google Relative Valuation: Introduction Four Steps to Deconstructing Multiples |
Packet 1 (268-276) Packet 2 (1-12) |
| 15 (3/21/07) | PE Ratios - Definition - Description - Analysis - Applications (Emerging Markets, Markets over time, Individual companies) |
Packet 2 (13-42) |
| 16 (3/26/07) | Take the second
quiz and check out the solution as
well as the distribution of
grades for the class. PE ratio regression for the market Comparing PE to Expected Growth PEG Ratios |
Packet 2(43-66) |
| 17 (3/28/07) | More on PEG Ratios EV Multiples (FCFF, EBIT and EBITDA) EV/EBITDA Multiples |
Packet 2 (67-113) |
| Weekly Challenge # 7 | Analyzing the PEGY ratio | Weekly challenge Solution |
| 18 (4/2/07) | Book Value Multiples Revenue Multiples |
Packet 2 (114-153) |
| 19 (4/4/07) | The value of a brand name Choosing the Right Multiple Reconciling Sector and Market Valuations Private company valuation: Cost of equity |
Packet 2 (154-186) |
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
| 20 (4/9/07) | Private company valuation: Cash flows Illiquidity and its costs The value of control |
Packet 2 (187-224) |
| 21 (4/11/07) | The allure of real options Why real options have value Three key questions about real options The Option to Delay and the value of a patent |
Packet 3 (1-31) |
| Weekly Challenge # 9 | Valuing Private companies | Weekly challenge Solution |
| 22 (4/16/07) | Take the
third
quiz and check out the solution as
well as the distribution of
grades for the class. Valuing biotechnology companies Valuing natural resource options The option to expand |
Packet 3 (32-53) |
| 23 (4/18/07) | Key questions on the option to expand The option to abandon The value of financing flexibility Equity in troubled firms as an option |
Packet 3 (54-99) |
| 24 (4/23/07) | Motives for acquisitions The value of control The value of synergy |
Packet 3 (100-135) |
| 25 (4/25/07) | More on the value of synergy and evidence Value Enhancment 101 |
Packet 3 (136-End) |
| 26 ( 4/30/07) | Closing Thoughts and Valuation Summaries | Closing presentation |
5/7/07 |
Take the final exam and check the solutions. | |