Stock Valuation: An Essential Guide to Wall Street's Most Popular Valuation Models (McGraw-Hill Library of Investment and Finance)

Stock Valuation: An Essential Guide to Wall Street's Most Popular Valuation Models (McGraw-Hill Library of Investment and Finance)
Scott Hoover | 2005-12-15 00:00:00 | McGraw-Hill | 400 | Investing

A practical look at the valuation models used by Wall Street

Veteran consultant and educator Scott Hoover analyzes the limitations and idiosyncrasies of major valuation models. He examines the time value of money, cash flow analysis, discount rates, and other tools, and describes how money managers and bankers apply them to valuation.

Reviews
This book does a very good job in covering the main concepts and procedures in stock valuation. It is very readable and very informative. The background required from the reader is quite basic. The reader needs only basic knowledge of finance and accounting and basic math.



The book presents a good introduction to financial statement analysis, discounted cash flow, relative valuation, and accounting for stock options in the valuation process.



I believe investors will find this book very useful, very informative, and very practical.




Reviews
Hoover writes for a reader interesting in deciphering financial statements, and who is willing to indulge in some simple analysis. This is really an introductory book to its field. But quite adequate for a layperson. The maths requirement is rudimentary. Summation of a finite series for estimating the time value of cash flow is a typical formule in the book. The maths is not emphasised. Instead, there is more of a general education in qualitative or semi-quantitative forecasting of a firm's future earnings. This is often quite adequate, without the need for more sophisticated modelling. Mostly because earnings can be so volatile.



One topical issue is how to value employee stock options. This has been a point of contention since at least the early 90s. When a bunch of Silicon Valley companies successfully nixed an attempt by the SEC to force companies to write a cost of issued options. Now, after the dot com and telecom implosions, it is mandatory. And the book shows easy ways to get reasonable estimates.

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