Sum-of-the-Parts Valuation

Valuing a company by adding up the estimated worth of each of its individual business segments.

A sum-of-the-parts valuation breaks a conglomerate or multi-division company into its separate business units, values each one as if it were standalone, and adds the pieces together. Analysts use it when a company's divisions operate in very different industries with different growth rates and risk profiles, since a single blended multiple would misprice the whole.

The analyst's sum-of-the-parts valuation showed the conglomerate was worth more broken up than as a single combined stock.