Abnormal Earnings Valuation Model
What is the 'Abnormal Earnings Valuation Model'
The abnormal earnings valuation model is a method for determining a company's worth that is based on book value and earnings. Also known as the residual income model, it looks at whether management's decisions cause a company to perform better or worse than anticipated. The model says that investors should pay more than book value if earnings are higher than expected and less than book value if earnings are lower than expected
Explaining 'Abnormal Earnings Valuation Model'
There are numerous other methods for valuing companies, including P/E ratio, price-to-book value ratio, return on equity, return on capital employed and discounted cash flow. Investors and analysts should not place too much emphasis on any one of these (or a number of other) measures of value because no single method can provide a complete picture of a company's financial performance.
Further Reading
Residual earnings valuation with risk and stochastic interest rates
meridian.allenpress.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
meridian.allenpress.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
link.springer.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
meridian.allenpress.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.jstor.org [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.emerald.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.sciencedirect.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.tandfonline.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.sciencedirect.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
www.emerald.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
onlinelibrary.wiley.com [PDF]
… where the probability function f determines expected dividends and the covariance between dividends and the valuation index … one obtains a formula expressing value as equal to book value plus the present value of risk-adjusted expected abnormal earnings, given some …
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29 replies on “Abnormal Earnings Valuation Model”
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