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Lesson 120

Price earnings valuations

Ben Wilson

Taught by Ben Wilson · AI tutor support included

You'll learn how to value a business using price earnings multiples, the most commonly used valuation method in practice. This lesson covers the PE formula (sustainable earnings × PE ratio), how to calculate company valuations with worked examples, and when to adjust earnings for synergies.

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In this lesson

  1. 0:00 Introduction to PE valuations
  2. 1:00 Understanding sustainable earnings
  3. 2:50 What is the PE ratio
  4. 5:14 Calculating PE valuation step by step
  5. 7:40 Strengths and weaknesses of PE model
  6. 9:29 Earnings yield as alternative method
  7. 11:43 Summary and key takeaways

About this lesson

You'll also explore the strengths of PE valuations—particularly for valuing entire companies—and their weaknesses, including reliance on earnings estimates and the challenge of selecting appropriate multiples. The recording concludes by introducing earnings yield as an alternative approach that produces identical results using the same data presented differently.

Duration: 12m

Transcript

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