New valuation techniques

Finally I can get to the new valuation techniques I have been working on lately, some are from the Manual of Ideas free download that I wrote about here, and see how they apply when used on Vivendi.

I will only put the base case on here and explain how you can change the values higher and lower if you would like to incorporate some of these into your use.

First up is a revenue and EBIT based valuation:

  • TTM revenue=28.8 billion
  • Multiplied by:
  • Average 7 year EBIT %: 18.24%
  • Equals:
  • Estimated EBIT: 5.11 billion
  • Multiplied by:
  • Assumed fair value multiple of EBIT: 8X
  • Equals:
  • Estimated fair enterprise value of VIVHY:40.86 billion
  • Plus:
  • Cash, cash equivalents, and short term investments:4.85 billion
  • Minus:
  • Total debt: 15.71 billion
  • Equals:
  • Estimated fair value of common equity of VIVHY: 29.99 billion Euros.
  • Equals:
  • $36.60 billion.
  • Divided by
  • Number of shares: 1.242 billion
  • Equals:
  • $29.47 per share.

If you want higher and lower estimate of values than you just change the EBIT multiple.

Second technique is a book value and P/B technique.

  • Book Value: 23.75 billion
  • Minus:
  • Intangibles: 6.814 billion
  • Equals:
  • Tangible book value: 16.94 billion
  • Multiplied by:
  • Industry P/B: 2X
  • Equals:
  • Industry multiple implied fair value: 33.88 billion (27.28 Euros per share)
  • Multiplied by:
  • Assumed multiple as a percentage of industry multiple: 95% (1.9X multiple of tangible book.
  • Equals:
  • Estimated fair value of the common equity of VIVHY: 32.19 billion Euros.
  • Equals:
  • $39.4 billion
  • Divided by:
  • Number of shares of 1.242 billion
  • Equals:
  • $31.72 per share.

To adjust this valuation change the industry multiple percentage.

As you can see, using these techniques I am still finding VIVHY to be very undervalued to its current price of $18.33 per share.

I was originally planning on putting more on here, but I will save those for my next company analysis and valuation.  I used five different valuation techniques to value the company I am researching right now, including one that is not in the MoI publication.

I will hopefully have the analysis up at the latest by Monday since I am going to be at one of my best friends weddings this weekend.

This is just a sample of some of the techniques in the Manual of Ideas free publication.  There are several more, including some industry specific ones, like how to value gas and oil reserves.  I highly recommend downloading the free publication from MoI to hone some of your techniques and maybe learn some new ones.

Hope you enjoy


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