DH :: Investment Model

The Valuator	Company 1		Company 2
The Valuator	Default Model	Custom Valuator	Default Model	Custom Valuator
Ticker (Lookup)
Company Name
Stock Price ($)
Dividend ($)
Tangible Book Value per Share ($)
FUNDAMENTAL VARIABLES
Normalized Earnings per Share ($)
Est 5 Year Annual Growth (%)
Est Required Return (%)
Current Adjusted P/E
Terminal Adjusted P/E Yr 5
CALCULATED VALUES
Est Earnings per Share Yr 5 ($)
Est Dividend per Share Yr 5 ($)
Est Tangible Book per Share Yr 5 ($)
VALUATION ESTIMATES
Derived Model Value ($)
Stock Price % of Derived Model Value
5-Year Price Target ($)
Est 5-Yr Annual Total Return (%)

USER GUIDE

INTRODUCTION

The Valuator is a simplified version of a methodology (tool) used by investment analysts at Diamond Hill Investments to determine "estimated intrinsic value" ("IV") for common stocks. The Valuator will calculate the IV for one company, or two companies to allow comparison. In addition to calculating and displaying the results for a default model, the Valuator allows the user to adjust the inputs to customize IV results. In addition, the sensitivity analysis feature allows the user to view different IV calculations for six different pairs of input variables. This is helpful in understanding the impact of the variables on the IV calculation (+ or -).

The results are heavily dependent on the quality of various inputs, which are subject to change over time with changes in market conditions. The results of the model represent estimates and should not be relied upon for the selection of securities. The estimates or other information generated by the Valuator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

HOW TO USE THE VALUATOR

To get started, enter the ticker symbol for a company you'd like to evaluate (e.g., GE for General Electric) into the "Ticker" input box for Company 1 (or use the Lookup feature to search for a ticker symbol), and then click the "Calculate" button (or press Enter). If there is a stock corresponding to the inputted ticker in our database of approximately 4,400 stocks, current data (i.e., company name, market closing price, dividend and tangible book value per share) will be displayed for this stock. The default valuation will use the derived model value of fundamental variables such as current normalized EPS, estimated growth rate and required return. These derived values are then used to estimate EPS Year 5, Tangible book value year 5, terminal multiple and the IV. The Custom Valuator column allows the user to input one's own assumptions for the fundamental variables and calculate different estimate of IV. After entering a new variable, click "Calculate" or press Enter to recalculate the IV. To determine how changes in input variables impact the IV calculation, choose one of the pairs of variables to the right of the Valuator table, then view the Sensitivity Analysis matrix at the bottom of the screen for Company 1. Repeat the process for Company 2 to compare the results for two stocks. You may press the "Clear" button at any time to clear columns of the Valuator and start over.

SENSITIVITY ANALYSIS

Please select the combination of changing variables Term. Adj. P/E Yr. 5 & Req. Return
Term. Adj. P/E Yr. 5 & Norm. EPS
Term. Adj. P/E Yr. 5 & Est 5 Yr. Annual Growth
Norm. EPS & Est 5 Yr. Annual Growth
Norm. EPS & Req. Return
Est 5 Yr. Annual Growth & Req. Return

	Company 1 Derived Model Value Matrix
	Variable I
Variable II		Default



	Default

	Company 2 Derived Model Value Matrix
	Variable I
Variable II		Default



	Default

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Investment Model | Diamond Hill Investments