Musings on Markets

MAY 20, 2022

In a final assessment, I break down companies based upon operating cash flows (EBITDA as a percent of enterprise value) and dividend yield (dividends as a percent of market capitalization). On bond ratings, there is no discernible link between ratings and returns, until you get to the lowest rated bonds (CCC & below).

Price to Book 102

Price to Book Dividends Beta Equity 102

Brian DeChesare

SEPTEMBER 13, 2023

Its financial profile now looks like this: Its Debt / EBITDA is now 10x, its EBITDA / Interest has fallen below 1x, the Secured Debt is trading at 90% of its face value, and the Unsecured Debt is down to 60%. A few years later, the company’s industry declined, and it was slow to cut costs and enter new markets.

Equity 103

Equity Banking EBITDA Start-ups 103

Valutico

OCTOBER 20, 2022

Practitioners assume the business is sold as a multiple of some financial metric like EBITDA, based on what they can see today for other businesses that were sold, and what these comparable trading multiples are. . B = Beta. (Rm EV/EBITDA Multiple. Exit Multiple (EV/EBITDA). Ce = Cost of Equity. Rf = Risk-free Rate.

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52

Brian DeChesare

MAY 3, 2023

In our forecast, Cash rises too much, and Debt / EBITDA goes from 5.0x Dividend Discount Model, Part 4: Present Value of Terminal Value and Dividends Since the Dividend Discount Model is based on Equity Value, not Enterprise Value, the Discount Rate is the Cost of Equity: Risk-Free Rate + Equity Risk Premium * Levered Beta.

Dividends 64

Dividends Terminal Value Enterprise Value Equity 64

Brian DeChesare

MAY 24, 2023

EBITDA multiple , matching its own. EBITDA since it’s only growing at 2-3% per year vs. 5-10% per year for Jacobs. A Sample Event-Driven Hedge Fund Trade To illustrate how these hedge funds work, I’ll walk through an announced spin-off here – Jacobs Solutions’ plan to divest its Critical Mission Solutions (CMS) division.

Equity 64

Equity Start-ups EBITDA Banking 64

Musings on Markets

FEBRUARY 27, 2023

One simplistic proxy for this cash generating capacity is EBITDA as a percent of enterprise value (EV), with higher (lower) values indicating greater (lesser) cash flow generating capacity. Debt to EBITDA, Interest Coverage Ratios If debt to capital is not a good measure for judging over or under leverage, what is?

Equity 52

Equity EBITDA Start-ups Net Debt 52

Musings on Markets

JANUARY 6, 2023

By the same token, it is impossible to use a pricing metric (PE or EV to EBITDA), without a sense of the cross sectional distribution of that metric at the time. For example, I have seen it asserted that a stock that trades at less than book value is cheap or that a stock that trades at more than twenty times EBITDA is expensive.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52