The integral model of equity valuation: The case of Russian oil and gas companies

Abstract

The topic of combination of different valuation approaches is unexplored. The goal of this study is to develop the integral model of equity valuation that would predict the value of equity of Russian oil and gas companies more accurate than stand-alone valuation models do. The integral model combines absolute (DCF) and relative (price multiples) valuation. The outcome of the model shows that these two approaches combined predict prices of the firm’s shares better than stand-alone methods of valuation do.