Equity Valuation Practitioner

From Multiples to DCF to Fair-Value Convictions

Five different ways to value a stock, when to use each, and how to triangulate them into a defensible price target. This is the practical workflow used at every long-only fund.

Equity analysts, sell-side associates, MBA students with intro finance.

修了後にできること…

Value any company using DDM, multi-stage DDM, FCFE, FCFF/DCF, and comparable multiples.

Compute a defensible WACC and use it as the discount rate.

Triangulate multiple methods into a fair-value range, not a single number.

Sense-check valuation against the SML and its implied required return.

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学習の旅

ステップ 1、40 分、Valuation

● 現在地

Stock Valuation

Dividend Discount Model (Gordon, multi-stage), P/E multiples, FCF/DCF.

DDM, multi-stage DDM, FCFE, FCFF/DCF: all in one workspace.

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実践例

Gordon Growth on a mature dividend payer (D₁=$4.20, r=10%, g=4%)

P₀ = D₁ / (r − g)

= $4.20 / (0.10 − 0.04)

P₀ = $70.00

ステップ 2、25 分、Risk & Return

Risk Decomposition

Split a stock's risk into systematic (β-driven) vs idiosyncratic.

Split the risk: how much is market-driven vs idiosyncratic?

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実践例

Risk decomposition for AAPL (β-driven vs firm-specific).

Component	% of Variance	Source
Systematic (β·σ_m)²	62%	Market-wide moves
Idiosyncratic (σ_ε²)	38%	Firm-specific news
Total σ²	100%	-

ステップ 3、25 分、Asset Pricing Models

CAPM Calculator

Live β regression, expected return via Capital Asset Pricing Model.

Get a defensible discount rate (cost of equity) for any stock.

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実践例

Cost of equity for a Russell 1000 name with β = 1.10

Ke = Rf + β·(Rm − Rf)

= 4.0% + 1.10·(10.0% − 4.0%)

Ke = 10.6% → use this as the discount rate in your DCF

ステップ 4、25 分、Asset Pricing Models

Security Market Line

Plot the SML; find under and overpriced assets via Jensen's α.

Cross-section view: is the current price above or below the line?

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実践例

Sample SML: find names with positive realized α (above the line).

ステップ 5、25 分、Performance Measurement

Sharpe / Treynor / Jensen

Compute every major risk-adjusted return ratio side-by-side.

Test if the stock has actually delivered risk-adjusted alpha historically.

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実践例

Stock vs S&P benchmark: does the realized record support the thesis?

Sharpe

0.85

vs 0.66

Treynor

0.072

vs 0.060

Jensen α

+1.2%

vs -

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ケーススタディ

Triangulating a fair value for AAPL: 3 methods, 1 conviction

Apple trades at $185. A multi-stage DDM with the current $1.00 dividend, 8% growth for 5y then 3% terminal, and a 9.5% required return → $145. An FCFF/DCF with explicit FCF projections, 8.5% WACC, and 2.5% terminal growth → $172. Comparable analysis using a 28× P/E (median of MSFT, GOOGL, MSI) on $7.50 EPS → $210. Three methods give a $145-$210 range; the centroid is ~$175, suggesting AAPL at $185 is fairly to slightly overvalued. A HOLD, not a screaming BUY. The Stock Valuation Lab runs all three methods side by side with your custom inputs.

Stock Valuation を試す →CAPM Calculator を試す →

ケーススタディ

When DCF lies: why high-growth tech needs a real-options overlay

Run a 'standard' DCF on a hyper-growth name like SHOP at 25% revenue growth, 15% terminal margins, 10% WACC → some massive number that depends entirely on terminal-value assumptions (which can be 80% of intrinsic value). Sensitivity-test by walking WACC from 9% to 12% and terminal growth from 2% to 4%, and you'll see fair value swing 3x. Lesson: DCF is necessary but insufficient for growth names. Triangulate with EV/Sales multiples vs growth-stage peers and use an SML check on realized β. The Stock Valuation Lab's sensitivity tab makes this quick.

Stock Valuation を試す →Risk Decomposition を試す →