By using enterprise value instead of market capitalization to look at the value of a company, investors get a more accurate sense of whether or not a company is truly undervalued.
It also far exceeds its competitors in a number of different ways: market capitalization, enterprise value, revenue, gross margin, and profit margin.
In investing I would argue that the best long-term returns come from three great ingredients: value, small capitalization and dividends.
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In fact, just using market capitalization as a measure of the value of the company, Apple could buy the sixth through tenth largest technology stocks traded in the United States.
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When sizing up a company, investors get a clearer picture of real value with EV than with market capitalization.
To initially determine the value of companies, we used the first-day market capitalization of venture-backed companies at the time of their IPOs or their acquisition price if purchased.
The baseline valuation for an online retailer will probably include the inventory and a capitalization of earnings, revenues, and whatever other key metric is used to value such a business.
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Most country funds, like other index funds, are market-weighted, meaning their exposure to different stocks is based on the total value of the stocks' shares outstanding in comparison with the market capitalization of other shares in that market.
Enterprise value is a term coined by analysts to discuss the aggregate value of a company as an enterprise rather than just focusing on its current market capitalization.
Traditional capitalization-weighted index funds are lower cost, while alternative indexes often have higher exposures to size and value factors.
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