Terminal Multiple Valuation (TMV): Intuition and Calculation

Terminal multiple valuation estimates a continuing value by applying a terminal multiple to a terminal-year earnings or cash flow metric. It is an alternative to the Gordon Growth terminal value.

Exact formula used in code

Implementation multiplies the industry P/E by EPS (TTM). The code requires a non-negative EPS and a valid industry P/E.

Notes

Very useful for industries with many peers.
Sensitive to market sentiment and sector cycles.

Related terms

P/E EV/EBITDA P/S P/B

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