We Stick to the Basics
When Apollo Capital documents equity valuation analysis on companies, we stick to the basics. Our thorough equity valuation process pays close attention to cash flow, profitability, growth and risk. While focusing on key ratios such as price to sales, price to cash flow, price to book value and price to earnings. We also establish a very personal relationship with management. This helps us to determine whether management has a successful infrastructure currently in place and is capable of handling day to day operations as the company continues to expand.
Apollo Capital’s equity valuation checklist includes the following:
- Understand the Investment: Apollo Capital executes a thorough valuation on the company’s current financial characteristics, as well as to predict its future cash generating ability. Typically, we only work with companies that possess strong balance sheets and solid cash flows. This caters to our value investors.
- Identify and Assess the Competitive Characteristics: We only focus on companies that have a competitive advantage in its industry. This attracts our growth investors.
- Assess the Industry in which the company operates: For long term predictability and continuity with regard to the material factors that influence the profitability and competitiveness of the companies within the industry.
- Utilize Quantitative Analysis: This is a must when determining the profitability of the company, revenue growth, and the effectiveness of management. We heavily weight management’s ability to allocate the company’s capital.
- Arrive at a Valuation: When valuing our client companies, we try to determine a true value that the market will agree on. This provides liquidity to our investors and a thriving stock for our clients.