Equity Analysis

CourseV-863-EQUI
Semester20193
ETCS7,5
CoreYes

Year1. year
SemesterFall 2019
Level of courseN/A
Type of courseElective
PrerequisitesNo prerequisites.
ScheduleNo schedule found.
Lecturer
Már Wolfgang Mixa
Content
 The focus of this course is on the financial analysis and valuation of companies. Therefore the course provides students with essential knowledge in equity valuation and develops skills and competences to apply this knowledge. The following topics and concepts are covered: The course is segmented into major sections. It starts with a discussion of the drivers of corporate value, specifically return on invested capital (ROIC) and organic revenue growth. Based on this, it examines how to build an ROIC-based valuation model in conjunction with a free cash flow to firm (FCFF) model. Following that it covers financial analysis using data from the annual report based on traditional competitive benchmarking and to current metrics such as return on invested capital (ROIC) and economic profit. The primary goal is to build a true understanding of operating performance across business units and for the entire company. Having covered the above elements, the course focuses on building an integrated valuation model using discounted cash flow. This section of the course starts with the fundamentals of forecasting, how to determine the appropriate forecast period, and issues related to continuing value. It covers the weighted average cost of capital, focusing on how to estimate the inputs. The final section discusses alternatives to DCF valuation, such as multiples analysis to triangulate DCF valuation and comparison to investment strategies of major investors.
Learning outcome - Objectives
Knowledge: Collection of facts, concepts, theories and techniques acquired by students. The student should:
- Know how to reorganize a financial statement
- Know how to assess past performance
- Know how to evaluate cash flow streams
- Understand the concept of valuation by multiples and how to calculate multiples
- Understand the concept of cost of capital
- Know the potential drivers of corporate value

Skills: The ability to apply knowledge to different setting in equity valuation. The student should:
- Be able to reorganize a financial statement
- Be able to calculate and apply multiples
- Be able to estimate cost of debt, cost of equity and WACC
- Be able to build a robust EP valuation model
- Be able to build a robust FCFF valuation model
- Identify and analyze the drivers of corporate value

Competences: The ability to apply knowledge and skills in equity valuation. The student should be able to:
- Analyze and interpret past performance
- Evaluate new projects and entire firms from a shareholder’s perspective
- Use results of valuation models in corporate decision making
- Analyze the impact of corporate decisions and of developments in the firm’s environment on corporate value
- Critically assess the limitations valuation models

Course assessment

Reading material
No reading material found.
Teaching and learning activities

Language of instructionEnglish