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This dissertation provides an overview of various valuation approaches, mainly the
multiples-based approach, the Dividend Discount Model, Discounted Cash Flow Model,
Residual Income Valuation Model and the Abnormal Earnings Growth Model. In addition, it
highlights the advantages and disadvantages of each, and follows with a discussion of the models
and evidence of empirical research. It then takes the angle of assessing the performance of
selected valuation models (Price to Earnings multiple using one and two-year forecast earnings
and the Residual Income Valuation Model) on companies in cyclical and acyclical industries.
The results of the empirical research highlight the over performance of the multiples-based
approach in both industry types as identified in this dissertation. Finally, a structured content
analysis is conducted on a selection of thirty-two equity research reports from cyclical and
acyclical industries. I examine the similarities and differences in the valuation methods used, in
addition to analyst recommendations while taking into account the state of the economy. I also
test the differences in the forecasted revenue growth rates and discount rates used in the
valuations between the cyclical and acyclical subsamples. Results of equity report content
analysis show that analysts, to a certain extent, do take into consideration the cyclicality of
companies.