24 Jun 2025 2:13 pm
There is no one way. If the company actually has earnings, then start with a discounted cash flow model. Make some assumptions about the discount rate/inflation, expenses, projected growth, product life cycles, etc. Depends on the entity. If its a single McDonalds franchise with 5 years of data, you should be able to get this down to the nearest $1,000.
If it is a startup company with no revenue, then EPS is irrelevant - you need to find some other way to model its value.
If it is a young fast growing company with revenue but no earnings - similar - you will need to model this differently - likely based on revenue growth data you already have.
What if its a Poke-Bowl franchise, being run by someone who's never been in the restaurant business, has infused $300,000 of capital into the venture, where she and her family members all work at the restaurant - showing barely break-even revenue/expenses, unable to pay back the 300K capital. Does it have any "intrinsic value"? If so, where is the value? If not, then why not?