Circuit City - Comparative Multiple Analysis

Circuit City (Comparative Multiple Analysis)

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Notes on the Comparative Multiple Analysis of Circuit City

WikiWealth compares Circuit City's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with Circuit City's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Circuit City.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Circuit City's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for Circuit City's Analysis


How does this work? The Comparative Investment Analysis determines the value of Circuit City by comparing Circuit City financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of Circuit City.

See the Circuit City cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in Circuit City.

Also, see the Circuit City's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and Circuit City's valuation conclusion for a quick summary.