Equity Valuation Models

The CFA curriculum discusses a variety of methods for estimating the value of a company’s equity.  The approaches, or models, fall broadly into these categories (covered in separate articles; follow the links):

• Present value models (also known as discounted cash flow models)
  • Dividend discount models (DDMs)
  • Free cash flow to equity (FCFE) models
  • Free cash flow to the firm (FCFF) models
• Multiplier models (also known as market multiple models)
  • Share price models
    • Price-to-earnings (P/E) ratio
    • Price-to-sales (P/S) ratio
  • Enterprise value (EV) models
    • EV/EBITDA ratio
• Asset-based models