Valuation Methods: The Valuation Matrix By Aswath Damodaran

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Recommended: Corporate Finance II

Ref: www.infrontanalytics.com

Valuation Methods;
Net Asset Value (NAV)
NAV is the book value of equity.
Net Assets = Total Assets – Total Liabilities = Total Equity (the shareholders’ funds)
(All values are taken from the balance sheet, see appendix.) (Total Non-Current Assets – Other Non-Current Assets) – (Total Current Liabilities + Total Non-Current Liabilities) (66,009 – 46,256 = 19,753 M) ˉ ( 18,547 + 19,188 = 37,735 M)
NAV = $19,753 M - $ 37,735 M
NAV= - $17,982 M

Net Asset Value Per Share (NAVPS)
Net Asset Value ÷ Shares Outstanding, diluted average (Ref: statement of earnings 2017 10k, page 59)
-$17,982 ÷ 1078.5 = - $16.67 …show more content…

The Valuation Matrix by Aswath Damodaran Ref:http://people.stern.nyu.edu/adamodar/pdfiles/execval/relval.pdf
Ref: http://people.stern.nyu.edu/adamodar/pdfiles/country/relval.pdf

P/E Ratio = Share Price / Earnings per share diluted (TTM)
= 72.90 / 3.62 = 20.14 or
P/ Ratio = Market Cap (M) / Revenue/ E Ratio can be thought of as time taken by WBA to earn back price paid for stock. Current P/E is less expensive than its 5-year average of 22.09.WBA in line with industry, CVS has advantage as P/E is lower, but WBA will have advantage due to imminent growth phase after Rite Aid acquisition. Ref: https://www.infrontanalytics.com/

P/S Ratio = Share Price / Revenue per share …show more content…

Price/Book Value = Market Value of Equity/Book Value of Equity.
= 73.08 / (BV per share for quarter ending Nov’17) 26.18
=2.79
The price/book value ratio is the ratio of the MV of equity to BV of equity, i.e., the measure of shareholders’ equity in the balance sheet.
The current P/BV is slightly less than its 5-year average and less than industry. It is indicative of the stock value relative to underlying assets within WBA.
WBA acquisition activity, combined with market raising alarms around possible entry by Amazon into pharmacy industry affect stock price.

PFCF = Share Price/ FCF per share (TTM)
= 73.08/ 5.919
= 12.49
FCF for WBA has reduced significantly due to recent events cited earlier. It is still better than CVS and understandably the diminished Rite Aid Corp.
Wal-Mart is classed as a comparable although it is a drug store chain, it is also a global food retailer which demonstrates that valuation by ratios/multiples is less than relative. Many stocks included in WBA’s industry are not trading on a global scale as it, CVS and Walmart do. This ratio can be misleading as it can

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