[Verse 1] Sarah's building models, needs to price a stock Restaurant chains scattered across her laptop dock Revenue per square foot, margins thin as paper Which cafes match her target? Numbers don't lie or caper Size matters first - market cap alignment Geography whispers through each financial statement Business models dancing in the same ballet Coffee shops with bookstores lead investors astray [Chorus] Same industry, similar size Same geography, same business ties Check the multiples, P-E and sales When comparables match, valuation never fails Screen for liquidity, recent trading flow Bad comps will sink your DCF ratio [Verse 2] Cyclical timing throws curveballs at your screen Tech boom multiples make everything obscene Growth rates diverging like branches on a tree Mature versus emerging - spot the company's decree Accounting quirks hiding in the footnote maze GAAP versus IFRS through regulatory haze Capital intensity separating wheat from chaff Asset-light models make heavy players laugh [Chorus] Same industry, similar size Same geography, same business ties Check the multiples, P-E and sales When comparables match, valuation never fails Screen for liquidity, recent trading flow Bad comps will sink your DCF ratio [Bridge] Outliers scream from scatter plot extremes Remove the noise from analytical dreams Enterprise value cleans the debt away Book value multiples for asset-heavy play [Verse 3] Five to ten peers create the golden range Too many muddy waters, too few feels strange Recent transactions paint tomorrow's price Stale comparables offer poor advice Quality spreads reflected in the yield Return on equity reveals who owns the field Avoid the temptation of convenient picks Lazy screening leads to valuation tricks [Chorus] Same industry, similar size Same geography, same business ties Check the multiples, P-E and sales When comparables match, valuation never fails Screen for liquidity, recent trading flow Bad comps will sink your DCF ratio [Outro] Peer selection builds your castle's foundation Garbage in means flawed interpretation Filter wisely, analyst's creed stays true Comparable companies mirror value through
← Enterprise Value Multiples | Asset-Based Valuation Methods →