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Value Models

Dividend Discount Model

The price-to-value ratio states the ratio of current price to intrinsic value for each company, as determined by the SEENSCO Dividend Discount Model. SEENSCO establishes payout ratios and 10 year earnings projections for each company covered. The future value of the company is determined by integrating short-term market consensus earnings estimates with longer term nominal incremental changes and deriving an optimal P/E ratio to the expected earnings at year 10. The future value and dividend stream are then discounted by the effective bond yield on the companies debt, adjusted for an equity risk premium, to arrive at the current intrinsic value.

To read the full methodology report please download the document below.

Dividend Discount Model: Methodology Report

Operating Cash-Flow Model

Pricing a company’s stock using the SEENSCO Operating Cash-Flow Model involves first estimating 10 year forward sales and earnings per share and then applying an operating cash-flow-to-earnings multiple to projected earnings to determine the future cash-flow stream. A valuation for the company is determined by assigning an equilibrium P/OCF ratio to a 10 year average cash flow projection. Adjusting this fair value by the normal trading range of the company’s stock gives the stock’s fair value range. A compound annual growth rate is then computed, assuming a 5 year holding period. Generally, stocks whose compound annual returns exceed the projected long-term annual rate of return on the market will qualify for investment while stocks whose returns are lower will qualify for sale.

To read the full methodology report please download the document below.

Operating Cash-Flow Model: Methodology Report

Other Models*

  • Residual Income Model
  • Yield Spread Model
  • Price Multiplier Model

*These models are available to institutional clients only. Please contact customerservice@seensco.com for additional details.