Alrighty, so lets say you have a company, and you have a few ways to value it right: DDM DCF RESIDUAL INCOME But the company doesn’t pay and probably wont pay a dividend for some time. Cash flow is negative. they run at a net loss.’ Best way to value this type of company? Granted it may not be the best company right now, but does anyone have an idea? I guess I could look at things like P/S, P/B, but there is probably a better way, thanks.
which cash flow are u talking about? FCFF or FCFE? or are you saying both FCFF and FCFE are negative
both.
this is easy… the number of website clicks
I realize that a company operating this way is not necessarily well positioned, and maybe there isn’t a great way to apply a valuation model you learn about in the CFA material. The fact is that there has to be a decent way to slap a price on something, is it liquidation value, do you tack on a premium if you think it might be a takeover target, is it a strong indication it is heading to zero and stay away…
DCF models discounting each individual year until the firm eventually show profitability. Or value AIG at it’s break up value since there’s no much left to drop down the drain.