Covidien - Comparative Multiple Analysis

Covidien (Comparative Multiple Analysis)

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Notes on the Comparative Multiple Analysis of Covidien

WikiWealth compares Covidien'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 Covidien's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Covidien.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Covidien'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 Covidien's Analysis


How does this work? The Comparative Investment Analysis determines the value of Covidien by comparing Covidien 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 Covidien.

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

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