1. Price-to-Sales ratio 7x
Companies in same INDUSTRY,
with same quality. Their only
difference is Size of Market 6x
Capitalization:
Median: 4x
3x
Small Large
Cap. 2x Cap.
2. Price-to-Sales ratio 7x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 6x
EARNINGS:
Median: 4x
High- 3x LOW-
quality quality
earnings 2x earnings
3. Price-to-Sales ratio 7x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 6x
EARNINGS:
Median: 4x
LOW- 3x HIGH-
quality quality
earnings 2x earnings
4. Price-to-Earnings ratio 17x
Companies in same INDUSTRY,
with same quality. Their only
difference is Size of Market 12x
Capitalization:
Median: 10x
7x
Small Large
Cap. 5x Cap.
5. Price-to-Earnings ratio 17x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 12x
EARNINGS:
Median: 10x
High- 7x LOW-
quality quality
earnings 5x earnings
6. Price-to-Earnings ratio 17x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 12x
EARNINGS:
Median: 10x
LOW- 7x HIGH-
quality quality
earnings 5x earnings
7. Price-to-Cash Flow 15x
Companies in same INDUSTRY,
with same quality. Their only
difference is Size of Market 11x
Capitalization:
Median: 8x
5x
Small Large
Cap. 2x Cap.
8. Price-to-Cash Flow 15x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 11x
EARNINGS:
Median: 8x
High- 5x LOW-
quality quality
earnings 2x earnings
9. Price-to-Cash Flow 15x
Companies in same INDUSTRY,
with same SIZE. Their only
difference is QUALITY OF 11x
EARNINGS:
Median: 8x
LOW- 5x HIGH-
quality quality
earnings 2x earnings
11. Price-to-Earnings ratio
17x
+ 2 St.dev: 17x
RELATIVELY
+ 1 St.dev: 15x EXPENSIVE
Median: 13x
Below-Average PER
KEY This area: Relatively CHEAP
12. Price-to-Sales ratio
Price-to-Earnings ratio Expen-
Price-to-Cash Flow ratio
Price-to-Book Value
sive
EV / EBITDA
Stock B
Approach
Industry Average
#1
Stock A “Same- Quality
Bargain Earnings &
F.Conditions”
13. Price-to-Sales ratio
Price-to-Earnings ratio Expen-
Price-to-Cash Flow ratio
Price-to-Book Value
sive
EV / EBITDA
This week
Approach
Historical Average
#2 of one and the same stock
Last Year “Same- Quality
Bargain Earnings &
F.Conditions”
14. Capital to Raise?
__bn /
Sales
Assets 50bn?
2bn /
200m / 1bn __bn? Guide to
20% Estimate