Projected Return On Value (PROVE)

Projected operating income (EBIT) divided by Enterprise Value, where Enterprise Value = (Price × Shares) + Long-Term Debt + Current Liabilities − Cash + Treasury Stock. PROVE is the foundation of PAR for our computed-coverage companies.

PROVE (Projected Return On Value) is the operating-earnings yield on enterprise value, projected five years forward. It is the foundation of PAR for companies on computed coverage.

**Formula:** Projected Operating Income (EBIT) ÷ Enterprise Value

**Enterprise Value** is calculated as:
(Price × Shares Outstanding) + Long-Term Debt + Current Liabilities − Cash + Treasury Stock

**Projected Operating Income** is determined via a cascade of methods, preferring the most reliable that fits the company's data:
1. EBIT regression using historical operating income plus analyst EBIT estimates
2. EBIT regression on historical operating income only
3. Cash-flow log-linear regression
4. Operating-margin regression (historical + analyst-implied margins) applied to projected sales
5. Trailing operating margin × projected sales
6. Trailing cash-flow margin × projected sales

The methodology tracks which step succeeded in the company's quality_breakdown for transparency.

**Financial institutions** use a simplified model — Net Income ÷ Market Cap — because operating income and enterprise value are not meaningful for banks.

**REITs** use a sector-appropriate Funds From Operations (FFO) variant.

PROVE generally resembles PAR in direction and serves as a cross-check on stated P/E ratios and profitability forecasts. For computed-coverage companies, PAR equals PROVE because projected dividends are already embedded in the operating-income numerator.