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Equity Valuation Models: Which model is most accurate for retail industry, clothing sector?
University West, School of Business, Economics and IT.
2022 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This paper aims to investigate which valuation model is most accurate for chosen sector. Valuation models used are multiple models Book Value (P/BV), Price to Sales (P/S), Price to Earnings Before Depreciation and Amortization (P/EBITDA) and Discounted Dividend model (DDM). Five companies which target price is calculated are from Germany, USA, UK, Sweden, and France in period between 2002 and 2021. Research methodology that will be used are measurements of valuation accuracy as Mean Absolute Error, Median Absolute Error, Standard deviation, and 1st and 3rd quartiles. Findings on this quantitative research is that multiple models Book Value and Price to Sales outperform other models, hence results show lowest valuation error. P/EBITDA is multiple that did not have great outcome, but it was more accurate than DDM model. This may be due to few outliers because of pandemic year and absent in dividend payout.

Place, publisher, year, edition, pages
2022. , p. 20
Keywords [en]
Equity, Asset, Valuation, DDM, FCFF, P/EBITDA, P/S, P/B
National Category
Economics
Identifiers
URN: urn:nbn:se:hv:diva-18882Local ID: EXC513OAI: oai:DiVA.org:hv-18882DiVA, id: diva2:1690707
Subject / course
Nationalekonomi
Educational program
Mäklarekonomprogrammet, fastighet och finans
Supervisors
Examiners
Available from: 2022-09-21 Created: 2022-08-26 Last updated: 2022-09-21Bibliographically approved

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