CRI: A Better Valuation Metric
Imagine if Wall Street valuation was based on a mathematical formula – how might leading a business be different?
- Business plans could be quickly and accurately valued and tested for value-creation sufficiency
- High value versus low value business and segments could be identified
- Resources could be allocated – or diverted – to support business with high value potential
- Compensation could reflect value creation at the segment level
- Low value business could be sold and replaced with higher value business in a quantitatively driven “value arbitrage” process
- Vast numbers of potential acquisitions could be screened efficiently based on the data that drives valuation
- Intense focus could be placed on the highest value targets, low value targets could be safely ignored
- 100% of acquisitions would create value for shareholders
CRI (Cash Return on Investment) is the result of a four year empirical study that aimed to unlock the mystery of stock market valuation.
CRI is Accurate
Across 70 industries, CRI is the most accurate measure and predictor of market value with an R2 of 91%.
CRI is Objective
CRI does not rely on fade rates, discount rates, or any other user adjustments. It is not subjective in any way and cannot be manipulated.
CRI is Efficient
CRI is comprised of a simple equation that can be applied quickly to any business with an income statement and a balance sheet.
Devon has developed the Cash Return on Investment (CRI) metric to accurately predict how the stock market will value company performance.