{ "docId": "019f6b8f-756e-76af-802b-17f806bd055d", "docSlug": "jarvis-valuation-multiples-primer", "documentTitle": "valuation multiples primer", "authorId": "valuation-multiples-primer", "authorName": null, "documentKindSlug": "deck", "documentKindLabel": "Deck", "sourceTypeSlug": "investor_relations", "sourceTypeLabel": "Investor relations", "presentationDate": null, "orientation": null, "aspectRatio": null, "pageNumber": 39, "pageCount": 47, "prevPage": 38, "nextPage": 40, "slideType": "other", "function": "analyze_data", "density": "overcrowded", "nDataPoints": 0, "notes": "Page 39 of a UBS Warburg report from November 2001.", "elementsJson": null, "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019f6b8f-756e-76af-802b-17f806bd055d/39", "deckHref": "/decks/019f6b8f-756e-76af-802b-17f806bd055d", "deckJsonHref": "/decks/019f6b8f-756e-76af-802b-17f806bd055d.json", "deckAnchorHref": "/decks/019f6b8f-756e-76af-802b-17f806bd055d#slide-39", "components": [ { "bbox": { "h": 0.05, "w": 0.25, "x": 0.07, "y": 0.278 }, "kind": "callout", "text": "Book value should be adjusted to remove accounting distortions", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4d04ce8e-dde4-423e-bda0-7d33023d21e5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.25, "x": 0.07, "y": 0.81 }, "kind": "callout", "text": "PEGs most suitable for valuing high-growth companies...", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a7bd6c3e-0409-43bf-ad4e-af2685bc4722", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.34, "y": 0.81 }, "kind": "list", "text": "Notably, at higher rates of growth PEG ratios are stable and less sensitive to changes in growth than PE ratios...", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "16396ddd-9cae-42ce-b279-54f8a318c41e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.6, "x": 0.34, "y": 0.28 }, "kind": "list", "text": "Ideally, book value should be adjusted for these differences. Some adjustments that might be made include: Stripping out revaluation surpluses, Restoring excess depreciation, Restoring accumulated goodwill amortisation, Restoring the LIFO reserve.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4fe322f8-ee03-47b3-beb3-04b588d2aa11", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.34, "y": 0.48 }, "kind": "list", "text": "This ratio is most widely used in valuing financials, especially banks...", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a86c562b-56a7-4ea5-95ec-ca99f49f6331", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.6, "x": 0.34, "y": 0.16 }, "kind": "list", "text": "Book values are not directly comparable where accounting policies cause them to deviate markedly from economic substance...", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d23fd203-a072-495a-b42c-28a03ecce08e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.34, "y": 0.1 }, "kind": "list", "text": "Using this measure with industrial companies requires care because net assets are based on historical cost book value, an unreliable indicator of economic value.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f2435a73-fd9c-43d0-94d0-416ae267f728", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.6, "x": 0.34, "y": 0.9 }, "kind": "other", "text": "11 For a more detailed discussion of PEG ratios, see our report Price Earnings Growth: A PEG for Your Valuations, November 1997.", "attrs": null, "subkind": "source-note", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "010c90fd-1ba1-43d5-bdcf-40666d47b4a9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.6, "x": 0.34, "y": 0.74 }, "kind": "paragraph", "text": "The PEG is based on the assumption that a PE ratio is positively linearly correlated to the expected growth rate in earnings...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ae24db05-9c65-4a9f-9fcc-781034c1c6ec", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.6, "x": 0.34, "y": 0.59 }, "kind": "paragraph", "text": "Definition: The 'PEG' ratio is the prospective PE divided by average forecast earnings growth. It is most widely used to value growth companies...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c47ab337-d087-481a-ae4e-ecd4bcbf01ba", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.4, "x": 0.34, "y": 0.66 }, "kind": "paragraph", "text": "Formula: PE / Growth = (ROE - g) / (100 x g x ROE x (COE - g))", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c9ea9642-b38d-4947-81a2-035d70f9bf7b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.3, "x": 0.07, "y": 0.05 }, "kind": "title", "text": "Valuation Multiples: A Primer", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8d74aa0a-8ac6-4d26-90ba-950736dbc8f4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.15, "x": 0.34, "y": 0.71 }, "kind": "title", "text": "When to use it", "attrs": null, "subkind": "subtitle", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3f1bce38-2222-4869-a56c-241437cdff3a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.34, "y": 0.56 }, "kind": "title", "text": "Price/Earnings Growth", "attrs": null, "subkind": "subtitle", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ea40b92c-834a-41c3-ac42-2f24def42138", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 41, "from": 37, "beatId": "63d7d446-6aa6-40ec-92bb-6f48c5cb435e", "arcName": "The Sequoia Pitch", "arcSlug": "sequoia-pitch", "beatName": "Product", "beatSlug": "sequoia-pitch-product", "evidence": "The document discusses equity multiples", "position": 3, "confidence": 0.7, "parentBeatName": "Evidence", "parentBeatSlug": "evidence" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }