Navkar Engineering Corporation: Intricacies with Valuation

Abstract

The case of Navkar Engineering Corporation focuses upon various methods of equity valuation. Whole case discusses the importance of Intrinsic value technique over Book value multiples. Quantitative models that analysts use to value common stocks in terms of future earnings and dividends that a firm will yield have been discussed in the case in detail. Whereas Book values based on original cost, market values measure current values of assets and liabilities. The case emphasizes the relative benefits of intrinsic value compared to book values. As Market values reflect the value of any firm as going concern, utility of such market values in equity valuation technique becomes important.

Benefits of sustainable growth rate over CAGR are captured in this case in elaborate manner. The case provides useful insights regarding the equity valuation methods.