Learning Points in Equity Valuations

My learning expectation in equity valuation is to gain a deep understanding of financial analysis and
valuation techniques used in evaluating stocks. I aim to develop the ability to effectively assess a company's
financial health, analyze its competitive position, and determine the intrinsic value of its shares to make
informed investment decisions.

The replacement cost method is the estimation of expenses to replace assets with similar ones,
considering industry advancements. It evaluates the spending needed to acquire equivalent assets or
technologies that can produce similar results as the current assets. By considering the current state of
technology, replacement cost provides a realistic assessment of the financial investment required to maintain or
upgrade assets and stay competitive. This evaluation helps organizations make informed decisions on asset
replacement or upgrades to ensure efficiency and effectiveness while keeping pace with industry advancements.

Relative valuation is a way to determine how appealing an asset is by comparing its price or value to
similar assets. It involves looking at the asset's price in relation to other similar assets to see if it is a good deal
or not. By using valuation metrics, such as ratios or multiples, we can compare the asset's price to its earnings,
sales, or other financial measures. This helps us understand if the asset is relatively cheap or expensive
compared to others in the market.

The Dividend Discount Model (DDM) is a way to predict the value of a company's stock. It assumes
that in the future, the company will keep increasing its dividend payments at the same rate as it has in the past.
By looking at how dividends have grown historically, we estimate how they will continue to grow in the future.
The DDM calculates the present value of these future dividends to determine the value of the company's stock
today. However, it is important to remember that this model relies on the assumption that dividend growth will
stay consistent, which may not always be the case.

Gordon Growth Model assumes that the company will continue to exist indefinitely and will keep
paying dividends to its shareholders. According to this model, the dividends per share will increase consistently
at a fixed rate over time. By assuming this constant growth in dividends, the model calculates the present value
of these future dividends to determine the intrinsic value of the stock. However, it is important to note that this
assumption may not always hold true in reality, as companies can face various changes and challenges over
time.

In conclusion, my learning journey in equity valuation has given me a better understanding of how to
evaluate stocks and make smart investment decisions. It has provided me with practical skills and knowledge
that can help me navigate the world of finance and achieve my financial goals.