Valuation Techniques

Analysis and insights from top thought leaders on a pivotal topic in investing and asset management Valuation is the cornerstone for investment analysis, and a thorough understanding and correct application of valuation methodologies are critical for long-term investing success. Edited by two leading valuation experts from CFA Institute, this book brings together the insights and expertise of some of the most astute and successful investment minds of the past 50 years. From Benjamin Graham, the "father of value investing," to Aswath Damodaran, you'll learn what these investment luminaries have to say about investment valuation techniques, including earnings and cash flow analysis. Features the best thinking on valuation from the industry's masters on the topic, supplemented with dozens of fascinating and instructive real-world examples Comprehensively discusses special valuation situations, such as real options, employee stock options, highly leveraged firms, corporate takeovers, and more Supplies you with the tools you need to successfully navigate and thrive in the ever-changing financial markets Is being produced with the full support and input of CFA Institute, the world's leading association of investment professionalsForeword Introduction Part I: Valuation Perspectives: Then and Now Chapter 1 Two Illustrative Approaches to Formula Valuations of Common Stocks (Benjamin Graham) Reprinted from the Financial Analysts Journal (November 1957):11--15. Chapter 2 Seeking a Margin of Safety and Valuation (Matthew B. McLennan, CFA) Reprinted from CFA Institute Conference Proceedings Quarterly (June 2011):27--34. Part II: Valuation Methodologies Chapter 3 Company Performance and Measures of Value Added (Pamela P. Peterson, CFA and David R. Peterson) Reprinted from the Research Foundation of CFA Institute (December 1996). Chapter 4 The Affordable Dividend Approach to Equity Valuation Alfred Rappaport Reprinted from the Financial Analysts Journal (July/August 1986):52--58. Chapter 5 Discounted-Cash-Flow Approach to Valuation (Gregory A. Gilbert, CFA) Reprinted from ICFA Continuing Education Series (1990):23--30. Chapter 6 Equity Securities Analysis Case Study: Merck & Company (Randall S. Billingsley, CFA) Reprinted from AIMR Conference Proceedings: Equity Securities Analysis and Evaluation (December 1993):63--95. Chapter 7 Traditional Equity Valuation Methods (Thomas A. Martin, Jr., CFA.) Reprinted from AIMR Conference Proceedings (May 1998):21--35. Chapter 8 A Simple Valuation Model and Growth Expectations (Morris G. Danielson) Reprinted from the Financial Analysts Journal (May/June 1998):50--57. Chapter 9 Franchise Valuation under Q-Type Competition (Martin L. Leibowitz) Reprinted from the Financial Analysts Journal (November/December 1998):62--74. Chapter 10 Value Enhancement and Cash-Driven Valuation Models (Aswath Damodaran) Reprinted from AIMR Conference Proceedings: Practical Issues in Equity Analysis (February 2000):4--17. Chapter 11 FEVA: A Financial and Economic Approach to Valuation (Xavier Adsera and Pere Vinolas) Reprinted from the Financial Analysts Journal (March/April 2003):80--87. Chapter 12 Choosing the Right Valuation Approach (Charles M.C. Lee) Reprinted from AIMR Conference Proceedings: Equity Valuation in a Global Context (April 2003):4--14. Chapter 13 Choosing the Right Valuation Approach (Robert Parrino, CFA) Reprinted from CFA Institute Conference Proceedings: Analyzing, Researching, and Valuing Equity Investments (June 2005):15--28. Chapter 14 Valuing Illiquid Common Stock (Edward A. Dyl and George J. Jiang) Reprinted from the Financial Analysts Journal (July/August 2008):40--47. Part III: Earnings and Cash Flow Analysis Chapter15 Earnings, Measurement, Disclosure, and the Impact on Equity Valuation (D. Eric Hirst and Patrick E. Hopkins) Reprinted from the Research Foundation of CFA Institute (August 2000). Chapter 16 Cash Flow Analysis and Equity Valuation (James A. Ohlson) Reprinted from AIMR Conference Proceedings: Equity Research and Valuation Techniques (May 1998):36--43. Chapter 17 Accounting Valuation: Is Earnings Quality an Issue? (Bradford Cornell and Wayne R. Landsman) Reprinted from the Financial Analysts Journal (November/December 2003):20--28. Chapter 18 Earnings Quality Analysis and Equity Valuation (Richard G. Sloan) Reprinted from CFA Institute Conference Proceedings Quarterly (September 2006):52--60. Chapter 19 Is Cash Flow King in Valuations? (Jing Liu, Doron Nissim, and Jacob Thomas) Reprinted from the Financial Analysts Journal (March/April 2007):56--68. Part IV: Option Valuation Chapter 20 Employee Stock Options and Equity Valuation (Mark Lang) Reprinted from the Research Foundation of CFA Institute (July 2004). Chapter 21 Employee Stock Option Valuation with an Early Exercise Boundary (Neil Brisley and Chris K. Anderson) Reprinted from the Financial Analysts Journal (September/October 2008):88--100. Part V: Real Option Valuation Chapter 22 Real Options and Investment Valuation (Don M. Chance, CFA and Pamela P. Peterson, CFA) Reprinted from the Research Foundation of CFA Institute (July 2002). Chapter 23 Real-Options Valuation for a Biotechnology Company (David Kellogg and John M. Charnes) Reprinted from the Financial Analysts Journal (May/June 2000):76--84. List of Contributors Index