What is a 'football field' valuation chart and how is it used in equity analysis?

The football field chart (also called a valuation summary or range chart) is a standard presentation tool used by equity analysts and investment bankers to summarize multiple valuation approaches side-by-side.

What it shows:

A horizontal bar chart where each bar represents a different valuation methodology, and the bar spans the range of implied values (low to high). The current market price is shown as a vertical line for reference.

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How to construct it:

1. Run multiple valuation approaches:

   • DCF (with base, bull, and bear case assumptions)
   • Comparable company analysis (EV/EBITDA, P/E, P/B)
   • Precedent transactions
   • Asset-based approaches (for certain industries)

2. For each method, determine a range:

   • Vary key assumptions (growth rates, margins, discount rates, exit multiples)
   • Use the 25th and 75th percentile of comparable multiples
   • Result: a low and high value for each approach

3. Plot the ranges as horizontal bars

4. Add reference points:

   • Current stock price
   • 52-week high/low
   • Analyst consensus target price

Why it's valuable:

• Visual convergence: If multiple methods cluster around the same range, it increases conviction. Wide divergence signals uncertainty.
• Identifies outliers: If one method gives a very different answer, it warrants investigation.
• Communication tool: Easier for clients and committees to understand than pages of spreadsheets.
• Decision framework: Where the current price falls relative to the value ranges suggests whether the stock is over/undervalued.

Example analysis: If Thornberry Manufacturing trades at $48 and the football field shows:

• DCF range: $42-$58 (current price near midpoint)
• Comps range: $45-$55 (current price below midpoint)
• Precedent transactions: $50-$65 (current price well below)

Conclusion: The stock appears moderately undervalued, especially relative to M&A benchmarks.

Exam tip: While the football field chart itself isn't directly tested, the concept of triangulating multiple valuation methods is core to CFA Level II. Be prepared to explain why different methods give different values.

Practice multi-method valuation in our CFA Level II equity section.