ADM Gave Itself Some Discounts
Also Cantor Fitzgerald’s deal pipeline, down-round employee equity, shifting factors and rainfall-based insurance fraud.
A dollar of income is worth more in some businesses than in others. Some businesses are attractive and fast-growing, and investors will pay a large multiple of their current earnings to buy them; other businesses are boring and declining, and investors will pay a small multiple of their current earnings to buy them. Nvidia Corp.’s stock trades at about 36 times earnings because people want to own a business that sells graphics chips in an artificial intelligence boom; Peabody Energy trades at about 6 times earnings because people are less jazzed about owning a coal miner in 2024.1
Many companies have multiple lines of business. You can do a sum-of-the-parts valuation on those companies, looking at the earnings of each segment and applying some reasonable market multiple to those earnings. If for some reason you had a conglomerate that made $1 billion selling graphics chips and $1 billion selling thermal coal, you might estimate that the graphics-chip division was worth about $36 billion (using Nvidia’s multiple) and the coal division was worth about $6 billion (using Peabody’s), for a total value of $42 billion.