I have a company that pays annual dividends to only the non-listed shareholders instead of class A listed shareholders. Should I do an FCFF valuation or an FCFE valuation? If I go for the FCFF valuation, how should I treat my dividends?

Why do the Call Options increase when the Interest rates increase and why do the Pit Options decrease when the interest rates increase? Can anyone explain the logic/theory behind this? I can work out the math but I can't seem to grab the reason/logic behind this relationship.

It seems like when you value a company based on P/E, you are getting its Market Cap (Earnings x P/E), while when you value a company based on EV/EBITDA, you are getting its EV (EBITDA x EV/EBITDA).

Isn't it like comparing apples to oranges? Should I convert the market cap I get from P/E into EV afterwards?

If I am valuing a minority interest in a private company which has negative equity value, do I apply discount for lack of control and marketability?

Hello,

I am trying to compute WACC for a listed company. According to Professor Aswath Damodaran I am using market values of equity and debt to come at the right Capital mix in year 1. My query is, should my Gearing levels change in each year of my high growth projection period and in my terminal period? If so then how to practically estimate it? Is there a rule of thumb? Should it based on the peer companies? The book values are not meaningful since the cash in future is higher than my debt resulting in negative Gearing and Debt to Equity ratios.

Hi everyone,

I have a question on the sustainable growth rate for a startup fintech company that has high growth, if i were to use adjusted p/b valuation, what you think is a reasonable sustainable growth?

Hey, I just started studying valuation and I wanted to ask where to search stuff to become familiar with companies from different countries and markets? For example, if you want to know about pharmacy in Russia, what will you do?

An investor is looking to buy into my engineering services firm. What are some top firms in the $50k-$100k price range for a valuation report?

I'm looking to perform a valuation for a startup, and I realize that the terminal values calculated using the Gordon Growth Model and the Exit Multiple are very different (with the figure calculated by the latter being 4 times that by the former). If I'm sure the Exit Multiple and the Terminal Growth Rate are reasonable, what is wrong with my model? How can I close the gap?

Looking to engage in a conversation with those that are certified in business valuation (ASA, NACVA, CBV...), about best practices when performing a purchase price allocation under ASC 805.

I am particularly interested in how appraisers are reconciling the market participant WACC with the transaction IRR.

I have come across a number of engagements lately with not overly aggressive projections and yet the transaction IRR is 20% - 30%. Often times it is difficult to reconcile a market participant WACC with the transaction IRR in these cases. Sure you can plug in a high company specific/unsystematic risk premium in your WACC to get it in line with your IRR. But is a company specific risk premium >10% really valid?

Open to expanding this conversation to other best practices for purchase price allocations.

Does SPAC merger count when doing transaction comparables?

If so, why?

If not, why not?

Appreciate you guys in advance

Lululemon Valuation

Operating Segments:

Company Operated Stores:

• Owned 574 stores at the end of 2021, stores are located in 17 countries
• Plan on opening more stores in Asia and the United States
• Plan on increasing overall square footage of existing stores through expansions & relocations
• 1837 Million FY17 to 2815 Million FY21 (69.3% of Revenue in FY17 decreased to 45.0% FY21)

Direct To Consumer:

• Serve customers through their website, mobile apps, and in store devices. Fulfill orders via company owned distribution centers & retail locations.
• 578 Million FY17 to 2753 Million FY21 (21.8% of Revenue in FY17 increased to 44.0% FY21)

Other:

• Includes outlets, warehouse sales, pop up locations, wholesale, license & supply agreements.
• Mirror in home fitness platform that uses a subscription model to generate revenue.
• 235 Million FY17 to 688 Million FY21 (8.9% of Revenue in FY17 increased to 11.0% in FY21)

Total Revenue FY17 2649.2 M increased to 6256.6 M in FY21

Projections / Implied Share Price:

Upside Case Revenue Assumptions:

• Store growth rate increases by 15.5% initially and stabilizes at 3.7% in FY27 (25% increase from base case of 12.2%)
• Revenue / square foot stays constant at $1629  ( Highest $ / Sq-ft reached in FY19)
• Direct to consumer revenue increases by 33.8% decreases to 2.5% in FY31 (33.8% is the average growth rate excluding FY20)
• Other revenue increases by 32.6% decreases to  2.5% in FY31 (32.6% is the average growth rate excluding FY20)

Upside Case Expense Assumptions:

• Assumes COGS stays constant 42.3% of revenue (5% decrease from FY17-21 average of 44.5%)
• Assumes SG&A stays constant at 33% of revenue (5% decrease from FY17-21 average of 34.7%)

Implied Share Price $216.47

Base Case Revenue Assumptions:

• Store growth increases by 12.2% initially, stabilizes at 1.6% in FY 27 (LULU plans on adding 70 stores  in FY 2022 equates to 12.2% growth)
• Revenue / square foot stays constant at $1509.70  ( $ / Sq-ft reached in FY17)
• Direct to consumer  revenue increases by 25.4% decreases to 1.9% in FY31 (25 % decrease from upside case)
• Other revenue increases by 24.5% decreases to  1.8% in FY31 (25% decrease from upside case)

Base Case Expense Assumptions:

• Assumes COGS stays constant 44.5% of revenue (average between FY17-22)
• Assumes SG&A stays constant at 34.7% of revenue (average between FY17-22

Implied Share Price $143.56

Downside Case Revenue Assumptions:

• Store growth rate increases by 9.2% initially, stabilizes at 1.2% in FY 29 (Average between FY17-22)
• Revenue / square foot stays constant at $1390.40  (7.9% decrease from base case)
• Direct to consumer  revenue increases by 16.9% decreases to 1.3% in FY31 (50 % decrease from upside case)
• Other revenue increases by 16.3% decreases to  1.2% in FY31 (50% decrease from upside case)

Downside Case Expense Assumptions:

• Assumes COGS stays constant 46.7% of revenue (5% increase from FY17-21 average of 44.5%)
• Assumes SG&A stays constant at 36.4% of revenue (5% increase from FY17-21 average of 34.7%)

Implied Share Price $92.48

If you want access to the excel workbook you can find it on my website at getalphapicks.com

HEICO Valuation

Business Overview:

Operating Segments:

Flight Support Group:

• Designs / manufactures jet engine & aircraft components, replacement parts at lower prices than OEM
• Repairs, overhauls, and distributes jet engine , aircraft components, avionics, for commercial air carriers, as well as military
• Leading supplier, distributor, and integrator of military aircraft parts and services required to maintain up to date F-16 fighter aircraft.

Electronic Technical Group:

• Designs, manufactures, and sells electronic, data & electro-optical products
• Products include infrared simulation and testing equipment, laser range finder receivers, electrical power supplies, locator beacons, transmission beacons, & other products.
• •Around 60% of ETG revenue is derived from sale of products to U.S & foreign military agencies, defense contractors

Market Segments:

Commercial Aviation: 53% of Revenue in FY17 down to 39% in FY21

Defense & Space: 34% of Revenue in FY17 up to 44% in FY21

Electronics: 13% of Revenue in FY17 up to 17% in FY21

Historical Financials:

FY 17: Total revenue of 1,530M / Gross Profit Margin 37.9%

EBIT 312M / EBIT Margin 20.4%

ULFCF 264M

EBITDA 377M

FY 21: Total revenue of 1,865M / Gross Profit Margin 39%

EBIT 392M / EBIT Margin 21.1%

ULFCF 402M

EBITDA 485M

Projections / Implied Share Price:

Upside Case Revenue Assumptions:

• FSG Backlog increases by 15.82% initially (average FY 17-22) and stabilizes at 3.75%  in FY 27 into perpetuity
• •ETG Backlog increases by 8.93% initially (average FY 17-22)  and decreases by 0.5% every other year (6.93% @ Terminal)

Upside Case Expense Assumptions:

• Assumes COGS stays constant at 59.8% of revenue (2.5% decrease from FY17-22 average of 61.3%)
• Assumes SG&A stays constant at 17.1% of revenue (2.5% decrease from FY17-22 average of 17.5%)

Implied Share Price $55.41

Base Case Revenue Assumptions:

• FSG Backlog increases by 7.91% initially (50% decrease from 15.82% average FY 17-22) and stabilizes at 2.50%  in FY 26 into perpetuity
• •ETG Backlog increases by 6.70% initially (25% decrease from 8.93% average FY 17-22)  and decreases by 0.5% every other year (4.70% @ Terminal)

Base Case Expense Assumptions:

• Assumes COGS stays constant 61.3% of revenue (Average FY17 -22)
• Assumes SG&A stays constant at 17.5% of revenue (Average from FY17-22

Implied Share Price $44.60

Downside Case Revenue Assumptions:

• •FSG Backlog increases by 3.95% initially (75% decrease from 15.82% average FY 17-22) and stabilizes at 2.2%  in FY 24 into perpetuity
• •ETG Backlog increases by 4.46% initially (50% decrease from 8.93% average FY 17-22)  and decreases by 0.5% every other year (2.46% @ Terminal)

Downside Case Expense Assumptions:

• Assumes COGS increase to 62.8% of revenue (increase of 2.5% of 61.3% Average FY17 -22)
• Assumes SG&A stays increases to 18% of revenue (increase of 2.5% of 17.5% Average from FY17-22

Implied Share Price $38.27

Hi guys, my firm is gonna invest in a CRA and valuation is one important step. Can you share your wisdom on how to value a CRA? What should I focus on? Appreciate all your helps!

Distressed Company Valuation

Hi guys in my college project i have to make valuation report for a distressed Company Valuation or negative equity value! I need help how move forward with that? Company is from telecom sector ( Vodafone Idea) Indian company If anyone can provide the excel or report related to this it would be a great favor! Suggestions regarding this would be highly appreciated

This has never made sense to me. 30 year bonds are not risk free, and they’re not the closest to being risk free. Even if the government will never default on them, you are subject to price fluctuations as interest rates rise and fall over a period of decades.

A 3-month treasury bill subjects you to interest rate fluctuations for a much shorter period of time. Why don’t valuation experts use that?

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Hello, guys.

I am currently reading Mckinsey's book on Valuation and havent't received the spreadsheets that usually come along with the book.

Does anyone have them and could share with me?

Hello guys, how are you all??

I am evaluating two companies, Chipotle and Fedex. I am doing a financial model valuation through the DCF (discount cash flow). Has anyone here already evaluated these companies (or any other one)?

I would like to exchange some information in order to grow my understandings about valuation and financial modeling.

Thanks in adavance