A Composite Multiple-based Stock Valuation Model

Authors

Mudita Lau, Parahyanan Catholic UniversityFollow
Maria Widyarini, Parahyangan Catholic UniversityFollow
Achmad Faisal, Parahyangan Catholic UniversityFollow

Creative Commons License

This work is licensed under a Creative Commons Attribution-Share Alike 4.0 International License.

Abstract

This study seeks to examine whether a composite valuation model (made of several multiples) can outperform a single-multiple valuation model in valuation accuracy. This study applied a trial-and-error iteration using scripts written in R studio to optimize the weight of each multiple in each composite, aiming to reach a minimum valuation error for each composite valuation model. Based on financial data of 2009-2019, a composite valuation model performs better than a single-multiple valuation model in assessing all peer groups, achieving up to 18% greater accuracy, which is a significant improvement. The result suggests that a composite valuation model generally offers superior valuation accuracy. Academics and institutional investors searching for improved valuation accuracy may consider a composite valuation model as an alternative method. This study adds empirical evidence to the current knowledge on multiple-based valuation models, highlighting the potential advantages of a composite valuation model over a single-multiple model.

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First Page

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Last Page

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Recommended Citation

Lau, Mudita; Widyarini, Maria; and Faisal, Achmad (2025) "A Composite Multiple-based Stock Valuation Model," BISNIS & BIROKRASI: Jurnal Ilmu Administrasi dan Organisasi: Vol. 32: No. 2, Article 2.
DOI: 10.20476/jbb.v32i2.1489
Available at: https://scholarhub.ui.ac.id/jbb/vol32/iss2/2