Frequently Asked Questions
Glossary
RBP®
The revenue growth necessary to support the current stock price. Required Business Performance® is calculated using a reverse discounted cash flow valuation model that uses the current stock price as the primary input.
RBP® Probability
The likelihood that management will deliver the Required Business Performance® to support the stock price. It is calculated by fitting the company’s historical revenue growth to a distribution, then finding the company’s Required Business Performance within this historical distribution.
RBP® Methodology
Uses a reverse discounted cash flow valuation model to determine what the stock’s current price implies in terms of future free cash flow and revenue (Required Business Performance® ) as well as the calculation of the likelihood that management can deliver the Required Business Performance®, known as RBP® Probability.


What is the RBP® Methodology?

RBP® stands for Required Business Performance and represents the level of performance that a company must deliver to support its current stock price. The aim of the RBP® Methodology is to reveal the information contained in the stock price within a concise, easy-to-understand metric.

What is RBP® Probability?

RBP Probability is calculated by fitting historical levels of business performance to a distribution curve and then finding the company's RBP within this distribution.

Is there universal/standard approach to analysis, i.e. number of templates?

There are seven templates designed around the structure of financial reporting standards for various industries. The templates contain the discounted free cash flow models, RBP® calculations, and probability calculations. While the format of the financial statements differs, the underlying calculation of RBP® is the same.

Standard templates cover the following industries:

  • Energy/Oil & Gas
  • Real Estate
  • Banking
  • Home Builders
  • Broker Dealers
  • Insurance
  • Commercial

The most common industry classification, Commercial, refers to all sectors that do not fall into one of the other categories. In addition to the broad templates, there are standardized business models for various industries. These are the models that evaluate a diversified company's individual lines of business and their contribution to total RBP®.