scholarly journals Stock Valuation Using Discounted Cash Flow Method with Free Cash Flow to Firm and Relative Valuation on Food and Beverage Sub-Sector Companies Listed on the Indonesia Stock Exchange for 2021-2025 Projections

2021 ◽  
Vol 9 (7) ◽  
Author(s):  
Fitra Nurwinda ◽  
Riko Hendrawan
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Discounted Cash Flow ◽  
Stock Valuation ◽  
Flow Method ◽  
Food And Beverage ◽  
Relative Valuation ◽  
Discounted Cash Flow Method

scholarly journals Stock Valuation in Pharmaceutical Sub-Sector Companies using the Discounted Cash Flow and Relative Valuation Methods in the 2013-2020 Period

2021 ◽  
pp. 167-176
Author(s):  
Afna Dalilah ◽  
Riko Hendrawan
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Fair Value ◽  
Free Cash Flow ◽  
Discounted Cash Flow ◽  
Stock Valuation ◽  
Industry Growth ◽  
Valuation Method ◽  
Pessimistic Scenario ◽  
Relative Valuation

This research aims at calculating the fair value of shares of pharmaceutical companies listed on the Indonesia Stock Exchange (IDX). The data used in this research is historical data from the 2013-2020 financial statements, which are used as the basis for projections in 2021-2025. The method used in this research is Discounted Cash Flow (DCF) method with Free Cash Flow to the Firm (FCFF) approach and Relative Valuation method with Price to Earning Ratio (PER) and Price to Book Value (PBV) approaches in three scenarios. The three scenarios used are the optimistic scenario (condition above industry growth), the moderate scenario (the most likely condition for the company), and the pessimistic scenario (the average condition of the industry). The results of the research showed that by using the DCF-FCFF method, KAEF and PYFA stocks experienced overvalued conditions in all scenarios. Meanwhile, KLBF and DVLA stocks were undervalued in all scenarios. Then, from the calculation of the Relative Valuation method, each company was still within the industry range in all scenarios. Overall, KAEF stocks were overvalued by 57.817%, KLBF stocks were undervalued by 7.879%, DVLA stocks were undervalued by 370.865%, and PYFA stocks were overvalued by 16.662% both in DCF method and in Relative Valuation method.

scholarly journals Performance Evaluation of Stocks’ Valuation Models at MSE

2018 ◽  
Vol 11 (2) ◽  
pp. 7-23
Author(s):  
Zoran Ivanovski ◽  
Zoran Narasanov ◽  
Nadica Ivanovska
Keyword(s):  
Cash Flow ◽  
Stock Prices ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Main Task ◽  
Stock Valuation ◽  
Market Prices ◽  
Valuation Model ◽  
Relative Valuation ◽  
Dcf Model

Abstract Subject and purpose of work: The main task of this paper is to examine the proximity of valuations generated by different valuation models to stock prices in order to investigate their reliability at Macedonian Stock Exchange (MSE) and to present alternative “scenario” methodology for discounted free cash flow to firm valuation. Materials and methods: By using publicly available data from MSE we are calculating stock prices with three stock valuation models: Discounted Free Cash Flow, Dividend Discount and Relative Valuation. Results: The evaluation of performance of three stock valuation models at the MSE identified that model of Price Multiplies (P/E and other profitability ratios) offer reliable stock values determination and lower level of price errors compared with the average stocks market prices. Conclusions: The Discounted Free Cash Flow (DCF) model provides values close to average market prices, while Dividend Discount (DDM) valuation model generally mispriced stocks at MSE. We suggest the use of DCF model combined with relative valuation models for accurate stocks’ values calculation at MSE.

scholarly journals Analysis of Islamic Banks’ Merger in Indonesia

2021 ◽  
Vol 4 (2) ◽  
pp. 112-120
Author(s):  
Fitri Mareta ◽  
Heliani Heliani ◽  
Siti Elisah ◽  
Andini Ulhaq ◽  
Indri Febriani
Keyword(s):  
Market Share ◽  
Cash Flow ◽  
Islamic Law ◽  
Stock Exchange ◽  
Profit Sharing ◽  
Free Cash Flow ◽  
Islamic Banks ◽  
Discounted Cash Flow ◽  
The Public ◽  
Relative Valuation

Islamic bank is a bank that collects funds from the public by using system profit sharing for every profit it gets and in carrying out its activities in accordance with Islamic law. Remembering that in Indonesia most of the population is Muslim, therefore they need a bank that works in accordance with Islamic law. Considering the number of percentages of Islamic banks in Indonesia are still small and cannot yet dominate the market share, therefore this research is expected to find out whether the merging of 3 Islamic banks (BRIS, BSM and BNIS) able to control market share or not. To see the synergy resulting from this merger is used methods Discounted Cash Flow - Free Cash Flow to Equity and Relative Valuation - Price to Book Ratio. The data used are the financial statements of each bank from 2014 to 2019 which are available on the Indonesia Stock Exchange (IDX) or the websites of each bank.

scholarly journals Valuation of Equity using Discounted Cash flow Method

2021 ◽  
Vol 23 (3) ◽  
Author(s):  
Mrs.Shailaja Konek ◽  
◽  
Ms.Srilakshmi D ◽  
Keyword(s):  
Cash Flow ◽  
Intrinsic Value ◽  
Free Cash Flow ◽  
Discounted Cash Flow ◽  
Investment Activity ◽  
Flow Method ◽  
Intelligent Decision Making ◽  
True Value ◽  
The Right ◽  
Discounted Cash Flow Method

The growth of any economy depends on the strong financial system. Capital market plays a significant role in channelizing the savings into an investment activity by providing the platform to the investors as well as the firms to raise money. There are various instruments available for investment activities globally. Every investor has an objective to diversify portfolio globally to minimize risk among foreign markets and companies. Investor has to acquire the necessary skills to analyze the stocks to make better investment decisions in order to create wealth maximization. Valuation of equity is pre requisite for intelligent decision making in choosing the right scrip for investment in deciding the true value or intrinsic value of a share. There are few methodologies to evaluate the valuation of stocks such as discounted cash flow method, dividend discounted model. In this backdrop, this paper made an attempt to evaluate the Skyworks Solutions, Inc. stock with free cash flow to equity (FCFE) method of valuation during the 2016 to 2019 and to determine the intrinsic value of the stock and results found to be undervalued.

Providing a Framework for Testing the Reasonableness of Terminal Period Cash Flow Investments

2020 ◽  
Vol 39 (1) ◽  
pp. 5-13
Author(s):  
Joseph Thompson ◽  
David Neuzil
Keyword(s):  
Research And Development ◽  
Cash Flow ◽  
Free Cash Flow ◽  
Working Capital ◽  
Discounted Cash Flow ◽  
Enterprise Value ◽  
Flow Method ◽  
Equity Value ◽  
A Company ◽  
Discounted Cash Flow Method

Whether using the traditional Gordon Growth formula or the value driver formula, it is common for a valuer to neglect testing the reasonableness of the capitalized free cash flow used in determining the terminal value and, therefore, derive a terminal value that is incorrect. This is troubling considering how important the terminal value is when concluding an equity value; the terminal value most often accounts for a majority of the concluded enterprise value when applying the Discounted Cash Flow method. The purpose of this article is to provide a framework for testing the reasonableness of the amount of terminal cash flow that is reinvested to support the operations into perpetuity. In general, there are three potential areas for a company to reinvest into its future operations: (1) net working capital, (2) purchases of property, plant, and equipment (PP&E), and (3) other investments (e.g., research and development [R&D]). Our article provides an overview of a suggested method for analyzing and calculating the appropriate amount of investments in net working capital and PP&E under the Gordon Growth formula. We also provide an example analysis to illustrate potential issues resulting from expensed investments (e.g., R&D) when applying the value driver formula.

scholarly journals Impact of accounting choice of dividends on the company’s value: Initial evidences

2019 ◽  
Vol 38 (2) ◽  
pp. 01-13
Author(s):  
Mariana Titoto Marques ◽  
Bruno José Canassa ◽  
William Aparecido Maciel da Silva ◽  
Jéssica de Morais Lima ◽  
Fabiano Guasti Lima ◽  
...  
Keyword(s):  
Cash Flow ◽  
Free Cash Flow ◽  
Accounting Choice ◽  
Working Capital ◽  
Discounted Cash Flow ◽  
Flow Method ◽  
Accounting Choices ◽  
The Difference ◽  
Accounting Reports ◽  
Discounted Cash Flow Method

The theme "value" always draws attention in discussions because its concept is linked to a high subjectivity. There are many models that try to get to an asset or a company’s value, which in addition to dealing with the subjectivity of the term, also must deal with several projections. The model of free cash flow is quoted in the literature. This method is affected by the variation of working capital which is the difference between assets and liabilities that is considered operational, calculated by Fleuriet’s Model, but to classify as operational is up to the evaluator/analyst. There are many choices for those who prepare the accounting reports too, what is called in the literature as the accounting choices. Example of the accounting choices is the treatment of interest, dividend and interest on shareholders' equity. Thus, if any account is classified as operational, this could impact the calculation of working capital and maybe, the value of a firm. This study analyzed whether there is an impact on the value, calculated by the discounted cash flow method, resulting from the accounting choice of dividends. Starting from the company's cash flow approach, which is affected by working capital, the sample was made by 80 companies in the Bovespa New Market between 2011 and 2015. Based on tests of mean and sign differences, the results confirmed what was expected: the dividend affects the free cash flow calculation and, moreover, should affect the company’s value.

scholarly journals Does The Stock of Indonesian Provider Tower Industry Have a Fair Value?

2018 ◽  
Vol 6 (4) ◽  
pp. 130-139
Author(s):  
Saptono Saptono ◽  
Farida Titik Kristanti
Keyword(s):  
Cash Flow ◽  
Stock Prices ◽  
Stock Exchange ◽  
Intrinsic Value ◽  
Fair Value ◽  
Jel Classification ◽  
Free Cash Flow ◽  
Stock Valuation ◽  
Market Prices ◽  
Relative Valuation

Objective - The objective of this study is to evaluate the stock intrinsic value of companies listed on the Indonesian Stock Exchange. The evaluation is carried out by using a DCF method of Free Cash Flow to Firm (FCFF) approach, and a relative method of Price to Earnings Ratio (PER) and Price to Book Value (PBV) approaches. Each approach uses three scenarios of optimism, moderation and pessimism. Methodology/Technique - The historical data of the companies between 2014 and 2017 was used to predict their performance in the period between 2018 and 2021. Findings - The results of this study indicate that by comparing the stock prices to their intrinsic value of the stock valuation of the DCF-FCFF, the stock market prices as of 1 January 2018 according to the optimistic scenario show that TBIG and SUPR were undervalued, while TOWR and IBST were overvalued. In the moderate scenario, TBIG and SUPR were undervalued, while TOWR and IBST were overvalued. Novelty - Meanwhile, TBIG, TOWR and IBST were overvalued and only SUPR was undervalued in the pessimistic scenario. Relative valuation using a PER approach in all scenarios indicates that TBIG, TOWR and IBST were overvalued and SUPR was undervalued. Finally, through a PBV approach, the relative valuation of TOWR, SUPR and IBST were overvalued and TBIG was undervalued in all scenarios. Type of Paper - Empirical. Keywords: Free Cash Flow to Firm; Relative Valuation; Tower Provider Industry; Intrinsic Value; Valuation. JEL Classification: G14, G15, G19.

Discounted Cash Flow Method for Valuing International Chemical Distributors

2018 ◽  
Keyword(s):  
Cash Flow ◽  
Discounted Cash Flow ◽  
Case Scenario ◽  
Flow Models ◽  
Flow Method ◽  
Study Approach ◽  
Equity Value ◽  
Multiple Case ◽  
Set Up ◽  
Discounted Cash Flow Method

Do special considerations apply to valuation in the case of large global chemical distributors? This study seeks to identify whether Income-based Discounted Cash Flow method based on projected future income would be suitable to value international chemical distributors. Two- and Three-stage Discounted Cash Flow models will be used. The expected companies’ enterprise and equity value are compared with the existing companies’ valuations. A base, bear and bull case scenario will be set up to establish the range of the company’s value for comparison with the existing valuation. This study adopts a single multiple-case study approach where actual financial data from three of the world’s largest chemical distributors were used to establish the existing companies’ valuation to demonstrate the validity and applicability of the Discounted Cash Flow method for sensitivity analysis.

Part III Substantive Rights, 9 Compensation

2017 ◽  
Author(s):  
McLachlan Campbell ◽  
Shore Laurence ◽  
Weiniger Matthew
Keyword(s):  
International Law ◽  
Cash Flow ◽  
Practical Importance ◽  
The State ◽  
Practical Application ◽  
Discounted Cash Flow ◽  
Flow Method ◽  
Monetary Compensation ◽  
Discounted Cash Flow Method

Chapter 9 examines the obligation upon the State committing the international wrong to make reparation through restitution or monetary compensation. It first considers the international law standards of compensation for expropriation before proceeding to discuss the range of options adopted in practice by arbitral tribunals. It then looks at practical application of the main methods of valuation used to determine the appropriate level of compensation, particularly the ‘discounted cash flow’ method, along with the issue of causation in international law. The chapter concludes with an analysis of five topics that are assuming greater practical importance in the approach of arbitral tribunals to remedies: the award of moral damages in exceptional circumstances; the claimant’s duties of mitigation of loss; the potential for the availability of non-pecuniary remedies; interest; and costs.

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