Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Wiser Wealth: How to set valuation targets

Brieanna McCutcheon , The Market Online
0 Comments| December 27, 2023

{{labelSign}}  Favorites
{{errorMessage}}

The following is a transcription of the above video, and The Market Herald Canada has edited it for clarity.

Welcome to Wiser Wealth. Recently, I spoke with Howard Katz, managing director at Research Capital Corporation, who is a regular on our Investor Series. We are discussing how to set valuation targets.

TMH:Howard, what factors do you consider when setting a valuation target for an investment in a publicly traded company?

Katz: Well, that’s a great question, Brieanna.

There could be several factors that go into a company valuation analysis. What we look to do first is identify the proper metrics, which to apply to a specific company.

And that has a lot to do with the sector that the company is in. A traditional cash-flowing business will look very different than a mining company or to a growth-orientated technology company. It really depends on the type of company that you’re looking for.

One size does not fit all. I would say at a very high level, what I like to do is first look at the overall industry research, find the applicable multiples to analyze a company, and then do a deeper dive based on the relevant multiples for that specific company.

TMH: Are you able to provide any insights into the specific financial metrics or ratios you might rely on when establishing a valuation target for potential investments?

Katz: You know, I can basically address it at this stage at a relatively high level. If for example, we’re looking at a company that has earnings then I would look at the universe of companies that are like it and see what level of earnings multiples that those companies
may have in comparison to its peer group.

I would look at it a little bit more closely. I should add though, that it doesn’t always mean that just because a company is trading at a discounted multiple to its peer group, there may be a very good reason for that.


The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.

Join the discussion: Find out what everybody’s saying about public companies and hot topics about stocks at Stockhouse’s stock forums and message boards.




{{labelSign}}  Favorites
{{errorMessage}}

Get the latest news and updates from Stockhouse on social media

Follow STOCKHOUSE Today

Featured Company