Valuation method of equity of shareholding companySeagameswomen'sfootball2022tableIntroduce the common methods and techniques of equity valuation

In the modern business environment, it has become a common trend for enterprises to cooperate and expand in the form of equity. In this process, how to accurately estimate the value of equity has become a concern of investors, management and financial analysts. This article will introduce several commonly used equity valuation methods and their application skills to help you better understand and grasp the core essentials of equity valuation.

oneSeagameswomen'sfootball2022table. Price-earnings ratio method

The price-earnings ratio method is a relatively simple equity valuation method, which estimates the equity value of the target company by comparing the price-to-earnings ratio of different companies. Price to Earnings Ratio (PE) is the ratio of a company's market capitalization to net profit, which is usually used to measure the valuation of stocks. In the specific operation, we can refer to the price-to-earnings ratio of listed companies with similar business characteristics in the same industry or market, and then estimate the equity value of the target company combined with the actual operating conditions and profitability of the target company.

two。 City-to-book ratio method

The price-to-book ratio method is another common equity valuation method, which estimates the equity value by comparing the company's market value with its net asset value. Price to Book Ratio (PB) is the ratio of a company's market capitalization to its net assets. In practice, we can refer to the price-to-book ratio of listed companies with similar business characteristics in the same industry or market, and then combined with the financial situation and actual asset value of the target company to estimate its equity value.

3. Discounted cash flow method

Discounted cash flow method (Discounted Cash Flow, referred to as DCF) is a more complex and accurate equity valuation method. This method estimates the equity value of the company by predicting the future cash flow of the company and discounting it to the current value. In the discounted cash flow valuation, we need to consider the company's operating risk, capital cost and future growth potential and other factors. In general, this method is suitable for mature and stable enterprises with predictable cash flow.

4. Asset pricing model method

Asset pricing model (Asset Pricing Model, referred to as APM) is an equity valuation method based on capital asset pricing model (Capital Asset Pricing Model, referred to as CAPM). The APM model evaluates the expected return of a company's stock by calculating the company's beta coefficient (Beta) and the market risk premium (Risk Premium). Through the analysis of the expected rate of return of the company's stock, the equity value of the company can be estimated. This method is suitable for investors who have certain expectations for the future rate of return of the company.

5. Real option method

The real option method is a more advanced equity valuation method, which regards the business development and strategic investment of the company as a kind of real option (Real Option), and estimates the equity value of the company by evaluating the value of the real option. The real option law applies to those enterprises with high degree of uncertainty and complexity, such as innovative enterprises, technology enterprises and start-ups.

When carrying out equity valuation, investors and enterprise management can choose their own valuation method according to their own needs and actual situation. At the same time, in order to improve the accuracy of the valuation, a variety of methods can be used for cross-verification. Through continuous study and practice, I believe you will better master the skills of equity valuation and provide strong support for your investment decisions.