Home | Support

The Value Of A Brand

Brand name of a product has certain value to a company. How do we value a brand and how does it affect the fair value of a common stock? There is no definite way of doing it since a brand is worth more to some than to other people.

Brand is valued in the balance sheet under 'Intangible Assets' or 'Goodwill'.. Each company values their brand differently but they all agree that brand name has certain value.

What is the best way to value a brand? Nobody knows for sure. One can only give his reasoning and then value the brand accordingly. Here, I will explore the possibility of valuing a brand based on asset value and based on the value of the common stock.

Let's use a familiar brand name. Coca Cola Company (KO) has one of the most valuable brand in the world under the Coke brand name. How much is it worth? We can go to any grocery stores to verify. Grab a bottle of Coke and a bottle of generic cola. What is the price difference? We can argue that the price difference is due to the Coke brand name. Let's assume a price difference of 10 cents. Let's assume that Coke sold 1 Billion bottles of Cokes each year.

This implies an additional $ 100 Million due to value of Coke brand. What is the fair value of a brand? Assuming a 7.5% yield (P/E of 13.4), the value of Coke brand is $ 1.34 Billion.

Please note that this is a very rough estimation of brand value . We just assume the same 10 cents product differential everywhere. Coke sells to almost every corner of the world and the price differential is not always 10 cents every time.

Furthermore, as you may know, if Coca Cola is not selling that much Coke this year, the value of the brand will drop and vice versa. Therefore, the value of the Coke brand will fluctuate depending on the sales of the product. Supply disruption will result in lower sales. If there is a disruption in supply, which has nothing to do with brand value, the value of the brand will decrease as well.

Should we care about the value of a brand when investing in the stock? Yes and No. Yes, if you are valuing the company on the basis of asset value. If the value of the brand is a significant part of the balance sheet, then you should include it to value the overall net asset of the company. If a stock is traded at $ 10 per share while the net book value with the brand value included is $ 15 per share, then investors might profit by buying the stock at $ 10 per share.

For our version of fair value, valuing a brand name is not necessary. This is because the fair value of a common stock is correlated with the profits generated by the company. What is the brand name of Enron when it cannot produce a profit under this scenario? Zero. In general, we should not care much about the value of a specific brand. All we are trying to do as investors is to buy undervalued investments. We should compare the profit generated by the company with the price of the common stock, not with the value of the brand.

More Articles



More Articles


Does My Small Business Really Need A Press Kit

... next day. Sending your information kit the next day also works as an important reminder of the evening s discussion. On the other hand, if you re a plumbing company, you might want to contact construction companies in your area to see if they re interested ... 


Finding Six Sigma Job Opportunities

... Six sigma is becoming very prominent because of its application in a business environment. All these factors have created a greater demand for six sigma professionals. Six sigma career opportunities are on the rise within the organization and outside the ... 


Home Business Why Wouldnt You

... status quo than you might think. You probably have to where a suit everyday which probably cost a lot, and it probably costs a lot on a regular basis to get cleaned, and it probably isn t as comfortable as sweat pants are. The only reason you where it ... 


Easy Home Business Ideas For Finding Customers

... business and the products you offer. If you are not comfortable creating your own page there are many professionals that can do this for you and you can use this as an opportunity to promote your business as well. As they get to know your product while ... 


The Advantage Of A Home Based Business

... greater than you working for an employer. Home-based business opportunities can provide you with independence and financial freedom if you make wise decisions. Money is not always the motivation people start a home-based business. Sometimes the intangible ... 


Are You Ready To Take Your Online Business To The Next Level?

Subscribe
FREE to EBK eZine Filled With Internet Marketing Tips and Strategies to Help You Improve Your Online Business and Create Profitable Results.

Every Week you'll receive our email publication packed with valuable techniques & insight on how to make more money with less effort.

We'll share with you special offers and promotions from other reputable organizations to help you build your business.

  • Learn extreme traffic strategies that will generate a stampede of visitors!
  • Discover the key to automation and utilizing software on your website!
  • Discover an ocean of marketing tips and secrets that can help your website succeed!

Instant access to this insider information won't cost you an arm and a leg!
...infact, it won't cost you anything!

That's one of the greatest thing about EBK E-Magazine. It's 100% Free. No high monthly costs, no extreme commitments. Just give it a try and if you don't like it, you can unsubscribe at anytime. Your privacy is assured!

Get our popular course ($97 value) and subscribtion to our members only area, where you can:

  • Download tons of free ebooks, scripts and software.
  • Special discounted offers to members only.
  • Money makeing turn-key web site offers

FREE Mini Course:

"7 Steps to Making Money On-line"

FREE Membership to our members only area


You will also get access to an ocean of marketing
ebooks and tutorials that you can see below

The Simple And Easy Guide To Starting Your Very Own Online Business ASAP…That Runs On Auto-Pilot And Earns You A Constant Monthly Residual Income

 

 


Here's How You Can Quickly & Easily Start Your Own Paid Membership Site and Watch Your Income Take Off In Just Weeks!

 

 


Here's How You Can Start Making Serious Money Right Away By Creating A Simple Little Ezine That Practically 'Forces' Your Customers To Whip Out Their Wallet and Buy Whatever You're Offering!

 


Here's An Open Invitation To Reach Inside The Twisted Mind Of A Search Engine Guru and 'Steal' His Secret For Driving Tons Of Free Traffic To Your Site... Assuring That You'll Make Loads Of Easy Money!


Simple And Easy Guide for Newbies To Starting Your Very Own Online Business ASAP…That Runs On Auto-Pilot And Earns You A Constant Monthly Income

 


If you want to set up an online business, this free mini-course can be your roadmap to success.

It'll take you from finding that perfect product to sell to running marketing campaigns that'll bring you solid profits.

You aslo get absolutely FREE ,This 5 great eBooks to teach you all you need to start your own internet business.

  • Self Publish at the Speed of Thought $9.97

  • A Cheap and Easy Guide to Self Publishing eBooks $9.97

  • Autoresponder Magic $17.00

  • The Internet Marketers Secret Guide $9.97

  • Your eBook Daily Marketing Plan $9.97

 

The Best Free Ebook?

The Best Free Ebook includes:

  • 44 Free ebooks - 20,351KB in total
  • 32 different ebook authors
  • 5,000+ affiliate links inside the ebooks you can brand free

So, what are you waiting for?

Register below and get everything on this page and much more right now!

First Name:
Email address:

We do NOT abuse email addresses

This is a double optin proccess, you will have to validate your subscribtion in the first validation message.

Thank you!

 

If you have any Questions please Click Here to contact us \

IMPORTANT NOTICE:   All information on this site is provided for entertainment purposes only. Any use of the information on this site should be based on your own due diligence - and you are strongly recommended to consult a suitably qualified professional. All content is provided "as is" and all warranties are disclaimed, whether express or implied, including, without limitation, any implied warranties of merchantability or fitness for a particular purpose.

Copyright © 2013, All Rights Reserved   -   Privacy Policy