Valuation Definitions

What this is

A concise reference for readers of my valuation reviews. It explains the terms I use and how I set key model settings.

Slide 1 — Core definitions

• Market capitalisation (equity value)
• Net cash / net debt
• Enterprise value (EV)
• Revenue (GAAP/IFRS)
• Gross margin; Operating margin
• Net present value (NPV)
• Discount rate (pointer to settings)
• SBC (stock-based compensation) and dilution note

Slide 2 — Model settings & multiples

• GAAP net income and net margin
• EV/Revenue (when it’s useful; common pitfalls)
• EV/E (how I use it): EV divided by GAAP net income. I compare it within a sector where leverage/tax are broadly similar and treat it as directional rather than a strict peer multiple.
• Discount rate method: start with the 10-year government bond yield (home market), then add premiums for size and business/country risk; if there’s visible policy/strategic support, the premium may be trimmed. Final rate is shown in each deck.
• Maturity (terminal) growth policy: −1% nominal by default; I may show a quick sensitivity (−2/−1/0/+1).
• DCF approach: present value of future GAAP net income discounted at my rate; I sanity-check against operating multiples.
• Consensus = date-stamped Street estimates cited in the slides.

Who it’s for

Serious retail and analysts who want to read the decks without ambiguity.

Policy

Educational research only. Not investment advice.