What is Corporate “ENTERPRISE” Financial Value?

Posted on September 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

THE E.V. MATH FORMULA

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By Dr. David E. Marcinko MBA MEd CMP®

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The enterprise value [EV] tends to be thought of as a theoretical takeover price if a company were to be bought. It is calculated as market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

CITE: https://www.r2library.com/Resource/Title/0826102549

Enterprise value = common equity at market value (this line item is also known as “market cap”) + debt at market value (here debt refers to interest-bearing liabilities, both long-term and short-term) + minority interest at market value, if any + preferred equity at market value + unfunded pension liabilities and other debt-deemed provisions – value of associate companies – cash and cash equivalents.

MORE: https://en.wikipedia.org/wiki/Enterprise_value

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What is ABSOLUTE [Intrinsic] VALUE?

Posted on September 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

A MATH AND FINANCIAL-INVESTING TERM

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By Dr. David E. Marcinko MBA MEd CMP®

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In mathematics, the absolute value or modulus of a real number x, denoted |x|, is the non-negative value of x without regard to its sign. Namely, |x| = x if x is positive, and |x| = −x if x is negative (in which case −x is positive), and |0| = 0. For example, the absolute value of 3 is 3, and the absolute value of −3 is also 3. The absolute value of a number may be thought of as its distance from zero.

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In finance, absolute value, also known as an intrinsic value, refers to a business valuation method that uses discounted cash flow (DCF) analysis to determine a company’s financial worth. The absolute value method differs from the relative value models that examine what a company is worth compared to its competitors. Absolute value models try to determine a company’s intrinsic worth based on its projected cash flows.

CITE: https://www.r2library.com/Resource/Title/0826102549

In investing, the key issues are as follows:

  • Absolute value refers to a business valuation method that uses discounted cash flow analysis to determine a company’s financial worth.
  • Investors can determine if a stock is currently under or overvalued by comparing what a company’s share price should be given its absolute value to the stock’s current price.
  • There are some challenges with using the absolute value analysis including forecasting cash flows, predicting accurate growth rates, and evaluating appropriate discount rates.
  • Absolute value, unlike relative value, does not call for the comparison of companies in the same industry or sector.

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HIDDEN RISKS: In “Religion” Stocks

Posted on September 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Vitaliy Katsenelson CFA

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INTRODUCTION
STOCK MARKET FAITH

A basic property of religion is that the believer takes a leap of faith: to believe without expecting proof. Often you find this property of religion in other, unexpected places – for example, in the stock market. It takes a while for a company to develop a “religious” following: only a few high-quality, well-respected companies with long track records ever become worshiped by millions of investors.

My partner, Michael Conn, calls these “religion stocks.” The stock has to make a lot of shareholders happy for a long period of time to form this psychological link.

READ HERE: The Hidden Risk in “Religion” Stocks

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DAILY UPDATE: Exxon Mobil, Medicare Part C, Boeing and UniCredit as Stocks Rise

Posted on September 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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California state officials filed a lawsuit against one of the world’s top oil giants accusing Exxon Mobil of driving global pollution by running a “decades-long campaign of deception” that dramatically overstated the effectiveness of plastic recycling. The suit seeks “multiple billions of dollars” in civil damages from Exxon Mobil—a main producer of the petrochemicals used to make single-use plastics—California Attorney General Rob Bonta said.

CITE: https://www.r2library.com/Resource

What’s up

  • Smartsheet popped 6.47% on the news that Blackstone and Vista Equity Partners will pay $8.4 billion in cash to take the software maker private.
  • Freeport-McMoRan gained 7.95% after the Chinese government announced stimulus plans. Shareholders are hopeful that more economic activity means more business for the copper miner.
  • Liberty Broadband soared 25.92% thanks to its counterproposal to Charter Communications, asking for a higher payout before an acquisition takes place. Charter shares fell 2.49%.
  • Thor Industries rose 6.18% after the RV company announced stronger-than-expected earnings.

What’s down

  • Visa fell 5.36% as the US government sued it over an alleged debit card monopoly.
  • Regeneron Pharmaceuticals dropped 4.21% due to a federal judge’s ruling that it cannot block a new product from rival pharma company Amgen that mimics its eye-care drug Eylea.

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Here’s where the major benchmarks ended:

  • The S&P 500® index (SPX) added 14.36 points (0.25%) to 5,732.93; the Dow Jones Industrial Average® ($DJI) rose 83.57 points (0.20%) to 42,208.22; the NASDAQ Composite® ($COMP) gained 100.25 points (0.56%) to 18,074.52.
  • The 10-year Treasury note yield (TNX) finished unchanged at 3.74%.
  • The CBOE Volatility Index® (VIX) keeps setting new lows for September, dropping to 15.49.

CITE: https://tinyurl.com/tj8smmes

Boeing offers 30% raise in attempt to end strike. With 30,000 factory workers on strike and 737 production halted for a second week, the embattled aviation company offered to hike wages for union members higher than the original 25% increase over four years they voted to reject.

Seniors could see large increases to their Medicare Advantage costs in 2025 as major changes are underway for prescription plans.

German Chancellor Olaf Scholz warned Italian bank UniCredit against “unfriendly” acts after the bank upped its stake in Germany’s Commerzbank, eclipsing the country as its largest shareholder.

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