The Research Foundation of AIMR & Blackwell Series in Finance
2 total works
Franchise Value and the Price/earnings Ratio
by Martin Leibowitz and Stanley Kogelman
Published 15 January 1991
This monograph develops the franchise value approach to analyzing the prospective cash flows that determine a company's price-to-earnings ratio. The franchise factor model retains the simplicity and intuitive appeal of the dividend discount model, but it offers the advantages of flexibility in application and insight into the components of P/E growth.
Of all the day-to-day activities that security analysts and portfolio managers perform, perhaps the most important is valuing the stocks they hold. In this monograph, the author introduces a new valuation approach that switches the focus from price to earnings to price to sales.