Session 14: Valuations at last

This is a direct recording from Zoom. I am sorry for the sound quality, but with broadband issues, and three people in the house all on Zoom at the same time, it is what it is.

In this session we started on valuing entire companies finally, by first valuing Con Ed in 2008 and following up with 3M pre and post 2008 crisis. We valued the S&P 500 at the start of 2020 and then moved on to valuing young companies, with a valuation of Amazon in 2000,.

[pelusin]

Unlimited generosity...always fun and thought provoking ...grateful!

[ericguo]

Hi professor, thanks for the video. I have a question about page 275- are we assuming that Con Ed’s ROE is equal to cost of equity? Can ROE be temporarily higher than cost of equity if the company has a strong moat? Similarly, can ROE be lower if the management is a bad steward of capital? If so, would you simply use a growth rate that doesn’t equal to retention x cost of equity, keeping all else in your equation the same? Thank you

[ayahassanfadl]

Hello professor,
First, I'd like to show my greatest gratitude for sharing these lectures here...
I've got a question; Why do we always ignore the (Change in working capital) in our calculation of FCFF, (as mentioned-cases here, &Tesla valuation)

[dybojoc]

I was wondering if you have the data sheet you used in one of your videos calculating debt ratios for various companies/sectors. It would be appreciated if you could link me to it in some way

[satyanshupadhyay]

sir if you take revenue of 5th largest retail store had in the 2000s and project that the same revenue for the amazon in 2010 as the 5th largest retail store isn`t you taking a low value for revenue

[Bigagoo]

And if I just can't create a story for my company I'm going to remember Warren Buffet's Too Hard pile.

[ManishYadav-unxg]

Sir, what is meant by the notation Return on equity=Cost of equity in the upper right hand corner i.e why dont we use the actual RoE of the company then?

[toughmonkey]

Professor, where I can find the spreadsheets that you mentioned? Thank you so much!

[playlistjohnnybitter]

I hate group work I always cause problems make others do all the work take all the credit.

[MyDreamside]

i still cant get over the fact, that he changes the cost of capital to find the present value. Shoudnt the discount rate reflects the current risk that the cashflows should be discounted? if i was to change the cost of capital in the future i would calculate the future fair value and then discount it back with the current cost of capital to arrive at present value

[benjamindorge]

When we're valuing businesses, I have always wrestled with Warren Buffett's refusal to use beta vs academia's and the finance industry's insistence on using it in estimating the cost of capital. Since price is not equal to value and beta is focused on the market value of a stock (price), would it be fair to say that perhaps beta should not used as part of the common yardstick?

[kunjlalka]

Sir a big request can you analyse the past fraud financial cases which help us to find fraud

Enron
Rcom
kingfisher
Lehman brothers