Purpose – This paper aims to examine the valuation precision of composite models in each of six key industries in South Africa. The objective is to ascertain whether equity-based composite multiples models produce more accurate equity valuations than optimal equity-based single-factor multiples models. Design/methodology/approach – This study applied principal component regression and various mathematical optimisation methods to test the valuation precision of equity-based composite multiplesmodels vis-à-vis equity-based single-factor multiples models. Findings – The findings confirmed that equity-based composite multiples models consistently produced valuations that were substantially more accurate than those of single-factor multiples models for the periodbetween 2001 and 2010. The research results indicated that composite models produced up to 67 per cent more accurate valuatio...

Purpose. This paper aims to examine the valuation precision of composite models in each of six key industries in South Africa. The objective is to ascertain whether equity-based composite multiples models produce more accurate equity valuations than optimal equity-based, single-factor multiples models. Design/methodology/approach. This study applied principal component regression and various mathematical optimisation methods to test the valuation precision of equity-based composite multiples models vis-à-vis equity-based, single-factor multiples models. Findings. The findings confirmed that equity-based composite multiples models consistently produced valuations that were substantially more accurate than those of single-factor multiples models for the period between 2001 and 2010. The research results indicated that composite models produced up to 67 per cent more accurate valuations th...