Sum-of-the-Parts (SOTP)
Values a company by separately valuing each business segment.
SOTP valuation breaks a diversified company into its individual business segments, values each using the most appropriate method (comparable multiples, DCF, etc.), then sums the segment values. It is especially useful for conglomerates where applying a single multiple to the whole business would be misleading.
Discounted Cash Flow (DCF)
Intrinsic valuation by discounting projected free cash flows to present value.
Enterprise Value (EV)
Market cap plus net debt — the total acquisition value of the business.
Market Capitalization
Share price multiplied by shares outstanding — the total equity value.
P/E Ratio
Share price divided by earnings per share — how much you pay per dollar of profit.
EV/EBITDA
Enterprise value divided by EBITDA — a capital-structure-neutral valuation metric.
EV/FCF
Enterprise value divided by free cash flow (TTM).