Research Article Open Access

Equity Valuation with the Use of Multiples

Stauropoulos Antonios1, Samaras Ioannis1 and Arsenos Panagiotis2
  • 1 Department of Applied Informatics, University of Macedonia, 156 Egnatia Str, P.O Box 1591 540 06, Greece
  • 2 Department of Business Administration, TEI of Ionian, Greece


Problem statement: Equity valuation with the use of multiples is widely used by academics and practitioners concerning its functionality. This study aims to explore the sensitivity of three multiples in terms of bias. Approach: The three multiples under consideration are the Price-To-Sales (P/S) multiple, the Price-To-Book value of equity (P/B) multiple and the Price-To-Earnings (P/E) multiple using both current and one-year-ahead earnings forecasts. Results: According to the empirical results, the multiples P/mdfy1 and P/mnfy1 are considered to be biased, with their means being negatively biased and their medians being positively biased. The results can be considered as reliable owing to the large sample and the procedure followed for its selection. Conclusion: This study offers a better understanding of the valuation approach through the use of multiples, in order analysts assumption to be more carefully and properly chosen and their results to be more accurately produced.

American Journal of Applied Sciences
Volume 9 No. 1, 2012, 60-65


Submitted On: 25 January 2011 Published On: 5 November 2011

How to Cite: Antonios, S., Ioannis, S. & Panagiotis, A. (2012). Equity Valuation with the Use of Multiples. American Journal of Applied Sciences, 9(1), 60-65.

  • 2 Citations



  • Equity valuation
  • multiples under examination
  • terms of bias
  • value relevance
  • Price-To-Earnings (P/E)
  • Price-To-Book (P/B)
  • Price-To-Sales (P/S)
  • discounted cash
  • intrinsic value
  • marginal information
  • valuation models
  • Residual Income Valuation Model (RIVM)