Residual Income Model - Valuing a Utility the Easy Way

This video describes the basics of creating a residual income model to value a utility company. Included are the required inputs into the model and descriptions of the formulas used to calculate the intrinsic value of a company.

Residual income valuation is an alternative valuation methodology for when a company has negative free cash flow, making a DCF approach ineffective.

Calculating the intrinsic value allows investors to make smarter decisions when building their portfolios and form their own opinions on whether or not market valuations are reasonable based on company fundamentals. It is useful in identifying companies that may be under or overvalued by the market, and generate returns in excess of the market over time.

• #people_blogs
• #finance
• #valuation
• #residual_income
• #valuing_a_utility
• #financial_modeling