We view assessing value as ‘more Art than Science’ and believe that no single valuation method can effectively determine the value of every security. This is because different companies / sectors within the market can have vastly different earnings and free cash-flow profiles. Some of the more common techniques we use to assess value include:
- Cyclical Industrials: Mid-cycle EV/EBIT, EV/Tangibles Assets
- Defensive Industrials: EV/EBIT, PE, Gross Dividend Yield
- Growth Industrials: DCF, PE Relative, EV/EBIT
- Financial companies: Price/Book, Price/NTA, PE, Gross Yield
- Resource companies: DCF, EV/EBITDA
We will take into account ESG issues in selecting the multiples and discount rates we use to assess value.