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More About This Title 2016 Valuation Handbook — Industry Cost of Capital
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The 2016 Valuation Handbook– Industry Cost of Capital provides valuation professionals with the same type of rigorous industry-level analysis previously published in the green-cover Morningstar/Ibbotson Cost of Capital Yearbook (now discontinued).
Using the most recent, up-to-date data is critical. The 2016 Valuation Handbook – Industry Cost of Capital provides up-to-date data as it is updated annually (with data through March), and includes three intra-year Quarterly Updates (June, September, and December; Quarterly Updates are (i) optional, and (ii) not sold separately). The new 2016 edition of the book is updated with data through March 31, 2016 (the prior 2014 and 2015 editions are also available, with data through March 31, 2014 and March 31, 2015, respectively).
The 2016 Valuation Handbook– Industry Cost of Capital provides up to eight (8) cost of equity capital and weighted average cost of capital (WACC) estimates for each of the U.S. industries covered in the book, plus capital structure, valuation (trading) multiples, sales, market capitalization, capital structure, several levered and unlevered beta estimates (e.g. ordinary-least squares (OLS) beta, sum beta, downside beta, etc.), financial and profitability ratios, equity returns, aggregate forward-looking earnings-per-share (EPS) growth rates, and more.
For more information about Duff & Phelps valuation data resources published by Wiley, please visit www.wiley.com/go/valuationhandbooks.
Also Available
- 2016 Valuation Handbook – Guide to Cost of Capital
- 2016 International Valuation Handbook – Guide to Cost of Capital
- 2016 International Valuation Handbook – Industry Cost of Capital
- Access cost of capital estimates and betas for approximately 180 U.S. industries.
- Reference industry-level valuation multiples, growth rates, sales, capital structure, profitability ratios, plus statistics that enable the user to gauge the impact of 'debt-like' off-balance sheet items on the capital structure of the subject industry.
- Use the information in this book to (i) benchmark, (ii) augment, and (iii) provide additional support for your own custom analyses of the industry in which a subject business, business ownership interest, security, or intangible asset resides.
- Ensure that you are using the most up-to-date information available by adding the intra-year Quarterly Updates.
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Roger J. Grabowski, Managing Director of Duff &Phelps LLC, is a major speaker at conferences and has testified in court as an expert witness on the value of closely held businesses and business interests, matters of solvency, valuation and amortization of intangible assets and other valuation issues. Roger authors the annual Duff& Phelps' Risk Premium Report.
James P. Harrington, Director in the Office of Professional Practice at Duff & Phelps, is an accomplished financial writer and analyst. He provides technical support on client engagements involving cost of capital and business valuation matters, and leads efforts for development of Duff &Phelps' studies, surveys, online content and tools, and internal models.
Carla Nunes, Director in the Office of Professional Practice of Duff & Phelps LLC, provides firmwide technical guidance on a variety of valuation, financial and tax reporting issues. She has directed multiple valuation assignments for a wide range of industries, including pharmaceutical, biotechnology, healthcare, vitamin retail, specialty chemicals, industrial manufacturing, and gaming and hospitality.
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Introduction 1
Who Should Use the Valuation Handbook – Industry Cost of Capital 1
Industry-Level Cost of Capital Estimates 2
Industry-Level Statistics, Capital Structure, Valuation Multiples, and Betas 2
Analysis of Capital Structure Including Off-Balance-Sheet Liabilities 3
New in the 2016 Valuation Handbook – Industry Cost of Capital 3
Methodology 5
“Data Through” Date 5
County of Incorporation 5
Company Type 5
Industry Identification by SIC Code 5
Minimum Number of Companies Required 6
Data Sources 6
Company Screening Process 11
Medians and Industry Composites 16
“Latest” and “5-Year” Averages 18
Calculations of Industry Financial Statistics 24
Three Largest and Three Smallest Companies by Sales and Total Assets 24
Annualized Monthly Performance Statistics 24
Number of Companies in the Median, the Composites, and the High-Financial-Risk Category 25
Return Ratios 26
Liquidity Ratio 30
Profitability Ratio 31
Growth Rates 32
Beta Overview 33
Levered Betas 34
Adjusted Betas 37
Unlevered Betas 39
Equity Valuation Multiples 41
Enterprise Valuation (EV) Multiples 44
Fama-French (F-F) 5-Factor Model 50
Cost of Debt 53
Leverage Ratios 54
Cost of Equity Capital Estimates 58
CAPM 59
Cost of Equity Capital Estimates - Using the CRSP Deciles Size Study 61
CAPM + Size Premium 61
Build-up Method 63
Cost of Equity Capital Estimates - Using the Risk Premium Report Study 65
CAPM + Size Premium 66
Build-up 1 Method 68
Discounted Cash Flow (DCF) Models 71
1-Stage DCF 71
3-Stage DCF 72
Fama-French (F-F) 5-Factor Model 76
Weighted Average Cost of Capital (WACC) 78
WACC Calculations 81
Exhibit 11: Distribution of Company-level Average WACC by Industry 84
Exhibit 12: Average and Median of Company-level Average WACC by Industry for “Healthy” Companies and “High-Financial-Risk” Companies 85
