Session 12: Equity Investments: Valuation Models
Reading 42: Market-Based Valuation: Price and Enterprise Value Multiples
LOS k: Calculate and interpret a predicted P/E, given a cross-sectional regression on fundamentals, and explain limitations to the cross-sectional regression methodology.
An analyst is valuing a company with a dividend payout ratio of 0.35, a beta of 1.45, and an expected earnings growth rate of 0.08. A regression on comparable companies produces the following equation:
Predicted price to earnings (P/E) = 7.65 + (3.75 × dividend payout) + (15.35 × growth) ? (0.70 × beta)
What is the predicted P/E using the above regression?
Predicted P/E = 7.65 + (3.75 × 0.35) + (15.35 × 0.08) ? (0.70 × 1.45) = 9.1755 | 
发表于 2010-4-19 15:53
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