In Valutico’s multiple-based valuation methods, visual indicators such as the red dot and blue range help users quickly interpret the outputs. This document explains why the red dot sometimes appears to the left of the valuation range in the Trading Comparables section.
What Does the Red Dot Represent?
The red dot marks the mid-point of the valuation output calculated using trading comparables. This mid-point is typically derived from the median multiple of the selected peer group. However, its final position may be adjusted based on user-defined inputs or system settings, such as:
Discounts or premiums applied to the peer group multiples.
Adjustments derived from the Qualitative Assessment.
Understanding the Blue Range and Red Line
The blue range represents the full valuation range derived from the selected peer group.
The red vertical line at the center of the range reflects the median of the peers' trading multiples.
Why Is the Red Dot Sometimes to the Left?
When the red dot appears to the left of the red line or left of the blue range, this indicates that a Discount has been applied relative to the peer median. This can happen in two ways:
Automatically: The system applies a default discount based on the outcome of the Qualitative Assessment, which considers factors like company size, risk, governance, and liquidity.
Manually: Users can override and apply a custom discount via the Peers and/or Transactions screens.
This downward adjustment shifts the valuation mid-point leftward, visually communicating a lower value relative to the unadjusted peer median.
What If a Premium Is Applied?
Conversely, if a Premium is applied, the red dot will shift to the right of the red line or blue range. This indicates a higher valuation mid-point based on factors suggesting the company being valued deserves a premium over the selected peer group (e.g. stronger growth outlook, higher margins, better governance).