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Equity Research: Trading Comparable

We can use public available data of companies within the same industry to make our trading comparable by using EV multiple like EV/EBIT, EV/EBITDA. We are going to calculate the similar companies' equity value, looking at its diluted shares outstanding as well as options restricted stock units, then understand how to work over the bridge to calculate the EV. Once we got the EV, we want to turn it into EV multiple like EV/EBIT to make comparable analysis.  EV & EBIT joined together, the higher the EBIT, the higher the EV; Price & EPS joined together, the higher the EPS, the higher the price: In terms of multiple, we want to understand what is its value driver and what does it drive? For P/E ratio, the value driver is the denominator, which is the EPS that drives the value - the share price. the value driver should be consistent with value number. Meaning it should stick with EPS, which is driving the value. We can't say the value is driven by the revenue since there are ...
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Equity to Enterpise Value Brige

Introduction:      In this article, I am going to talk about the Enterprise Value (EV).  Fistly, we will cover the concept of EV. Secondly, we will run our calculations to understand how to get to enterprise value from equity value or doing the opposite way, from equity value to enterprise value. The concept of  Enterprise Value     Before we dive into the Enterpise Value, we should understand the Equity to Enterpise Value Bridge.  This mean we should understand the equity value, which is the market capitalization first. To understand the equity value can help us to calculate the EV at the end, since EV is comprised of Net Debt (Total Debt minus Cash and Cash equivalent) and Equity Value. You shouldn't be confused with both "values" here, eventhough their name might look similar to you.  Equity value is calculated by       Traded Shares Price x Number of Diluted Shares at "the end of the period".      (If th...
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