Comments on: Brand as driver of stock price http://newrulesofinvesting.com/2009/09/22/brand-as-driver-of-stock-price/ where investment businesses grow Mon, 21 May 2012 04:44:00 +0000 hourly 1 http://wordpress.org/?v=3.1 By: newrulesofinvesting http://newrulesofinvesting.com/2009/09/22/brand-as-driver-of-stock-price/comment-page-1/#comment-621 newrulesofinvesting Wed, 23 Sep 2009 13:29:41 +0000 http://newrulesofinvesting.com/?p=1818#comment-621 Thanks for your comments, Tim. I haven't seen the full study (it hasn't been released widely) but it doesn't look like the valuation of brand equity is added to the PE or DCF. Instead, as you say, the value of the brand should flow through to the margins and cash flow of the firm.<br>It would have been more correct to say that more valuable brands snapped back quicker after the carnage of 2008-2009 than their peers. That may be empirically true and I haven't seen longer historical data. Thanks for your comments, Tim. I haven't seen the full study (it hasn't been released widely) but it doesn't look like the valuation of brand equity is added to the PE or DCF. Instead, as you say, the value of the brand should flow through to the margins and cash flow of the firm.
It would have been more correct to say that more valuable brands snapped back quicker after the carnage of 2008-2009 than their peers. That may be empirically true and I haven't seen longer historical data.

]]> By: Tim http://newrulesofinvesting.com/2009/09/22/brand-as-driver-of-stock-price/comment-page-1/#comment-620 Tim Wed, 23 Sep 2009 13:10:37 +0000 http://newrulesofinvesting.com/?p=1818#comment-620 I am not so sure of the findings of the study.<br><br>The value of the brand should be reflected in the profit margins and cash flow of the company. It would not be correct to value the brand on other metrics and add it to the PE or DCF valuation.<br><br>It can be that companies with well known brands have higher margins and / or cash flow and would thus be valued higher in terms of normal financial valuation metrics.<br><br>I did not read the study but do they have any performance data going back longer than the current downturn as it is too short significant? I am not so sure of the findings of the study.

The value of the brand should be reflected in the profit margins and cash flow of the company. It would not be correct to value the brand on other metrics and add it to the PE or DCF valuation.

It can be that companies with well known brands have higher margins and / or cash flow and would thus be valued higher in terms of normal financial valuation metrics.

I did not read the study but do they have any performance data going back longer than the current downturn as it is too short significant?

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