![]() These threats can arise from how their company is valued on its own, differences in how their company is valued compared to competitors across and within industries, and how their valuation changes over time. ![]() This approach not only handicaps management teams, it can inhibit a company’s ability to recognize opportunities and neutralize threats. When managing their valuations, companies focus largely on improving price-earnings (PE) ratios by driving revenue and margin based on historical heuristics, or summaries of past experiences that aren’t systematically analyzed and thus imprecise. So why don’t corporate managers have a similarly quantitative, detailed understanding of how the market values their company, so they can make equally informed decisions to maximize shareholder value? Investors have detailed, quantitative valuation models they consult before making investment decisions.
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