Stock Valuation Approaches used by Champion Business Models.

In this article we are trying to find out the Valuation method used in the model of business champions. There are number of valuation techniques available and we use different approaches according to the situation as no one method is suited to value the stock at every time and situation.

The first approach of stock valuation is Intrinsic Value approach where earning forecast we derived the future dividends. We determine the worth of the business that is equal to the net present value of the future cash flows. The Intrinsic value is used in discounted cash flows such as TFC. Dividend discount Model is most commonly used for this approach.

The second valuation approach we used is called Relative valuation approach that determines the company value by comparing it to with similar company values. This approach is most commonly used in property or Real Estate.

The third approach is known as Acquisition value that calculates a company share price by determining its worth to third party acquirer. In comparison with the relevant company the analyst evaluates the industry acquisition prices.

 The fourth approach we used to identify the stock valuation is Leverage buyout value where the prospective price of the business is its value in leverage buyout. . Leverage buyout is used when we expand the company and in order to raise the finances, the Assets are pledged therefore the real worth of the Assets determines the overall value of the company.  

The fifth approach is based on technical analysis value where we predict the share price by investigating its historical patterns and trends and then applying it to the future as well. This approach is used by the momentum investors who believe in daily trading. Hence investment analysis was on the bases of above valuation approaches.