Will forward-looking estimates provide financial experts with the best valuation multiples? Most business valuation leaders make that assumption, since the estimated future benefits of ownership ultimately determine value. The authors of The Footnotes Analyst offer a new perspective in their recent post. In “Equity Analysis Using Price-Multiple Charts,” they suggest that historical, current, or forward prices “individually provide valuable insights but combining them provides a bigger picture and facilitates further analysis.”

Their summary of pricing bases appears in the chart below.

The authors have studied valuation calculations extensively, most recently in two other posts:

• “Why You Should Forward-Price Valuation Multiples”; and
• “DCF Terminal Values: Using the Right Exit Multiple.”

Summary of Alternative Pricing Bases for Valuation Multiples