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  "docSlug": "jarvis-valuation-multiples-primer",
  "documentTitle": "valuation multiples primer",
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  "notes": "This is a page from a UBS Warburg primer on valuation multiples.",
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      "kind": "callout",
      "text": "Multiples are commonly plotted relative to growth or return on capital",
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      "kind": "callout",
      "text": "Care must used in comparing multiples to growth rates, as not all growth adds value",
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      "kind": "callout",
      "text": "Where is the current multiple relative to a 'fair' or target multiple?",
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      "kind": "chart",
      "text": "Chart 7: Relative Valuation - a Stylised Example showing observed multiple cycling around a flat 'fair' multiple over time.",
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      "kind": "list",
      "text": "Multiple to growth: This includes such comparisons as PE ratio to earnings growth (the PEG ratio), EV/EBITDA to EBITDA growth and so forth. A low multiple to growth indicates potential undervaluation.",
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      "kind": "paragraph",
      "text": "Relative Valuation - Observed Multiple versus Comparable\nThere are several ways one can apply multiples in valuation. The common approach is to compare the current multiple to a historical multiple measured at a comparable point...",
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      "kind": "paragraph",
      "text": "Linking Multiples and Value Drivers\nA more common way to look at multiples is to plot them relative to various value drivers. The most frequent comparisons are multiples versus growth in an underlying statistic and multiples to return on capital.",
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      "kind": "paragraph",
      "text": "Relative Valuation - Observed Multiple versus Target Multiple\nHowever, one can also compare a stock's current multiple to a calculated fair or target multiple...",
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      "kind": "paragraph",
      "text": "But not all growth adds value, as we discuss above; this type of comparison ignores profitability, which determines whether growth adds or subtracts value.",
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      "kind": "title",
      "text": "Using Valuation Multiples",
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      "kind": "title",
      "text": "Section 3",
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