First and foremost, I want to acknowledge that the entire framework used in this analysis is inspired by Professor Aswath Damodaran’s most recent blog post, where he reverse-engineers a discounted cash flow model to estimate the breakeven revenues that high-valuation global companies—such as NVIDIA—would need to generate in order to justify their current market prices.
In essence, as discussed in more detail below, he takes a modified version of his intrinsic valuation model and, instead of solving for the intrinsic value of equity (the usual unknown in a DCF), he algebraically solves for revenue as the unknown. This reframes valuation around a single, central question:
"What must this company earn to justify its market value?"
In this article, I apply the same logic to the Greek market, examining the Top 10 companies by market capitalization and asking the equivalent question for each.
“Do these firms generate enough revenue today to justify what the market is currently paying for them?”
Link to his original post:
https://aswathdamodaran.blogspot.com/2025/12/trillion-dollar-market-caps-fairy-tale.html
Why This Analysis Matters Right Now
Debates about valuation—both globally and locally—have intensified during the past year. While many major economies have faced rising interest rates and slowing growth, Greece has followed a more moderate path. However, with the Greek equity market delivering remarkable returns (ATHEX Composite Index +44.05% YTD), combined with high market concentration and increasing investor optimism, a natural set of questions has emerged:
Are markets overvalued?
Are we in a bubble?
Are prices driven by fundamentals or by sentiment?
To approach these questions, I place particular emphasis on market concentration, which plays an especially important role in Greece. A relatively small group of companies accounts for the majority of total market capitalization and drives most of the index’s performance. Because of this, understanding whether the largest and most influential firms justify their valuations is essential for assessing the true underlying dynamics of the Greek market.
In this analysis, I examine whether the top 10 companies by total market capitalization in Greece justify their value based on the revenues they generate today. These firms collectively represent roughly 65% of the entire ATHEX market cap—not just the index weight. If these companies are fundamentally sound, it serves as a strong first indicator of market health and reduces the likelihood that Greece is experiencing a valuation bubble.
That said, large-cap strength does not guarantee that the rest of the market is equally healthy. I address this limitation, and the broader market implications, in the final section of the article.
Conceptual Framework: Why Damodaran Uses a Revenue-Based Intrinsic Valuation Model
In his original analysis, Damodaran notes that debates over whether a company is worth a billion, ten billion, or even a trillion dollars often become unproductive arguments, with each side relying on different assumptions and talking past each other. To cut through that noise, he reframes the problem.
Instead of asking whether a company is worth its market capitalization, he asks a more transparent and measurable question:
“How much revenue would this company need to generate today to justify its current market value?”
Damodaran focuses on revenues because they are:
far less affected by accounting choices than earnings,
more stable across time, and
easier to compare against the size of the markets a firm operates in.
To answer this question, he uses a simplified intrinsic valuation model—an adaptation of the traditional DCF framework—designed to capture the economic engine that truly drives equity value: a firm’s ability to convert revenues into cash flows for its shareholders.
His model rests on one key assumption:
The company is in stable, long-term growth, expanding at or below the nominal growth rate of the economy indefinitely.
For the purposes of this work, I apply this assumption to all firms in the sample, acknowledging that not all of them may be fully mature yet. However, given their size and market position, many are likely not far from a steady-state phase, making the assumption a reasonable approximation for this setting.
With this assumption in place, the value of equity can be written in a mature-firm, constant-growth form, shown below:
Rearranging this expression yields the breakeven revenue—the level of revenue a company would need to generate today in order for its current market capitalization to be fundamentally justified:
This is the exact structure I use here.
Adopting the same logic allows me to extend Damodaran’s reasoning to the largest companies in the Greek market and pose the same central question:
“Do these companies generate enough revenue today to justify what the market is paying for them?”
I include this section only to offer the conceptual backdrop for the method employed. For a deeper dive into the model’s mechanics, assumptions, and implications, I strongly recommend reading Damodaran’s original article.
How I Selected the Companies
For this analysis, I focused on the Top 10 companies in the ATHEX Composite Index, the most widely followed benchmark for Greek equities. A few clarifications are important:
The index is free-float market cap weighted; not full market cap weighted
The free-float adjustment—i.e., converting free-float market cap to total market cap—can change the ranking of companies
But for practical purposes, these ten names represent the economic core of the Greek market
They include Greece’s major banks, essential-service providers, and multinational leaders. These are the firms that:
drive most of the index’s performance,
anchor domestic and international investor sentiment, and
effectively determine whether the broader market appears fundamentally justified or stretched.
In that sense, examining these companies offers a meaningful first look into whether Greek equities are appropriately valued—at least at the top of the market, where most of the capital resides.
Detailed Assumptions Behind the Model
1. Market Capitalization (Total MC)
Initially, I assumed that the ATHEX Composite Index was weighted by total market capitalization. My plan was simple: download the index composition from the ATHEX website and use it as a convenient way to gather the market caps of the largest companies all in one place. That is exactly what I did at first.
However, after reviewing the index methodology and examining the composition data more carefully, I realized that the ATHEX Composite Index is free-float market–cap weighted, not total market–cap weighted. This means that the market cap figures shown directly on the ATHEX website represent only the portion of shares available for trading—not the company’s full economic value.
To recover each firm’s total market capitalization, I reversed the free-float adjustment using the following calculation:
All of these inputs are provided directly in the ATHEX index composition table.
Of course, an investor could simply source total market capitalizations from a financial data provider, but the ATHEX website remains a convenient place to gather many key inputs at once. Just make sure to adjust the free-float market cap to arrive at the total market cap if you choose to use the index data.
2. Net Profit Margin & Return on Equity
For simplicity, I follow Damodaran’s approach in his blog post and use each company’s LTM Net Profit Margin and Return on Equity as inputs to the model. As he notes, these profitability measures can certainly change over time—especially for firms that are not yet fully mature—which would make the stable-growth formulation less appropriate. Nevertheless, for the purposes of this work, using the latest twelve-month figures provides at least a rough approximation of each firm’s steady-state profitability.
3. Perpetual Growth Rate (g)
The logic behind estimating the perpetual growth rate is straightforward: combine Greece’s expected real GDP growth with its expected inflation rate to arrive at a long-term nominal growth estimate.
Using forward-looking IMF data:
Real GDP growth (5-year forward): 1.72%
Expected inflation (CPI): 2.38%
Summing those components yields a long-term nominal growth rate of approximately 4.1%.
However, given the uncertainties surrounding Greece’s structural reforms and its economic past—and because my own preference is to take a conservative stance—I elected to use a more cautious estimate.
I therefore cut the nominal growth rate in half, resulting in:
g = 2.05%
For simplicity and consistency, I apply this perpetual growth rate to all companies in the analysis.
4. Cost of Equity (k)
To estimate the cost of equity for the companies in the sample, I followed an approach inspired by Damodaran’s method for deriving implied equity risk premiums—though not identical to it. Rather than assigning a separate discount rate to each firm, which would introduce additional assumptions and unnecessary dispersion, I first estimated the implied cost of equity for the Greek equity market as a whole, based on its current valuation level. Once obtained, I applied this single market-wide rate uniformly across all companies to maintain simplicity in the breakeven revenue calculations.
The adjusted earnings-based Gordon formula I used is:
For the inputs:
Forward Earnings Yield: obtained by reversing the forward (9,12) P/E ratio from the MSCI Greece IMI Index, resulting in a forward earnings yield of 19.96%
g (Perpetual growth rate): 2.05%, as previously calculated
ROE: Eurozone all-industries ROE of 10.47%, taken from Damodaran’s dataset
Using these inputs yields an implied cost of equity of 10.87%, which serves as the discount rate applied uniformly to all firms in the analysis.
Short Comment on the Implied Cost of Equity
The resulting implied cost of equity of 10.87% represents the return that investors collectively require from Greek equities today for current market prices to be supported by underlying fundamentals.
An implied cost of equity close to 11% is relatively high compared with developed European markets, and it reflects the residual macroeconomic, political, and liquidity risks that investors continue to associate with Greece. Yet, it is also significantly below the levels observed during—and immediately after—the sovereign debt crisis, signaling a substantial improvement in investor confidence over the past decade.
Taken together, this required return suggests a market that is neither euphoric nor distressed. Risk is being priced meaningfully, but not excessively, consistent with a market environment that remains cautious while steadily stabilizing.
The Results: Breakeven Revenues vs. Actual Revenues
Before interpreting the results, it is important to understand how to read them correctly.
Breakeven Revenue is the theoretical annual revenue a company would need to generate today in order for its current market capitalization to be justified, given its margins, reinvestment needs, growth expectations, and cost of equity.
By contrast, LTM Revenue represents the revenue the company has actually generated over the last twelve months. Since it effectively measures what the firm is earning right now, it serves as the closest available proxy for comparison.
The interpretation is straightforward:
If LTM Revenue > Breakeven Revenue:
The company is generating more revenue than what is required to justify its valuation.
→ The firm appears reasonably or fairly valued under this framework.
If LTM Revenue < Breakeven Revenue:
The company is generating less revenue than what is required.
→ The valuation looks stretched relative to fundamentals.
Key insight
Under this framework, 40% of the companies in the sample appear to generate enough revenue today to justify their valuations, while the remaining 60% do not—based solely on their LTM numbers.
However, LTM revenue can be misleading when we are close to year-end, especially for companies with strong seasonality or historically large Q4 results. To address this, I performed an additional check using each company’s Q4 revenue from the previous year, which provides a more flexible benchmark for what they might realistically earn by year-end.
Using Q4 2024 Revenues as a Benchmark
To add more realism, I examined each company’s Q4 2024 revenue and asked a straightforward question:
If the company repeats its Q4 performance from last year, would this be enough to close the breakeven revenue gap?
Practically, this means adding last year’s Q4 revenue to the current LTM revenue to estimate what the company might generate by the end of this year. Since we are already near year-end, this serves as a reasonable forward-looking proxy.
Example:
Based on LTM revenue alone, ETE is €0.6B short of its breakeven revenue requirement.
But last year, Q4 revenue was €0.7B.
If it delivers a similar performance this year, its valuation becomes fully justified under this model.
Conclusion from the Q4 Adjustment
After applying this second check, the picture becomes much clearer:
Only two companies remain fundamentally overvalued under these assumptions:
Coca-Cola HBC (EEE) — short by approximately €4.2B
PPC — short by approximately €9.7B
The other eight companies appear fundamentally sound and capable of justifying their current market valuations under reasonable expectations.
So… Is the Greek Market in a Bubble?
My takeaway:
The large-cap segment of the Greek market—representing roughly two-thirds of total market capitalization—does NOT appear to be in bubble territory.
However, it is critical to note:
The health of the top 10 companies does not guarantee the health of the entire market.
Smaller companies may:
Struggle with profitability
Exhibit thin revenues
Face reinvestment constraints
Trade on illiquid sentiment rather than fundamentals
This is where a bubble—if one exists—would be hiding.
The Breadth Perspective: Advances–Declines Index
To gauge the health of smaller companies in the Greek market, my initial intention was to examine a Greek Advances–Declines Index, which would show how many stocks are rising or falling on a given day. Unfortunately, such an index does not appear to be publicly available for ATHEX.
As an alternative, I looked at the NYSE Advances–Declines Index using TradingView—not because it directly reflects the Greek market, but to illustrate how “market breadth” behaves and how a market can weaken beneath the surface even when headline indices rise.
The Advances–Declines Index helps answer important questions:
How many stocks are actually rising each day?
How many are falling?
Are market rallies broad-based or concentrated in a few names?
The chart shows that, in the most recent period, more NYSE stocks are declining than advancing. When this is combined with the 17.07% year-to-date gain in the S&P 500, it suggests that fewer stocks are actually participating in the market rally. This pattern typically indicates that only a small group of large-cap companies is driving market gains, while the majority of stocks lag behind.
If we translate this logic to the Greek market, it suggests a possibility—not a conclusion—that a similar dynamic could be occurring: large-cap Greek firms may be supporting the index, while smaller companies beneath them might be experiencing weaker momentum. This does not imply a bubble, nor does it indicate that the market is fundamentally overvalued; it simply means that investors should remain cautious and avoid becoming overly enthusiastic based solely on index performance.
Of course, the relevance of breadth signals depends heavily on an investor’s strategy. Someone relying on long-term intrinsic valuation (DCF-style investing) may view short-term breadth weakness as irrelevant, whereas an investor focused on market timing, risk management, or meeting specific cash-flow needs might consider it an important signal.
Final Thoughts
This analysis does not attempt to predict or declare whether the Greek market is—or is not—in a bubble. I simply do not know that, and sweeping forecasts would be irresponsible.
Instead, the goal is to provide a structured way to understand where valuations stand today by asking three fundamental questions:
What must companies earn to justify their valuations?
What do they actually earn?
Is any gap between the two reasonable or concerning?
Based on Damodaran’s model and the assumptions laid out in this article:
✔ Most Greek large-cap companies appear fundamentally justified
✔ Two companies stand out as materially stretched
✔ Smaller caps may still contain hidden risks
✔ Market breadth remains an essential indicator to monitor going forward
This framework is not perfect—nor is it intended to be. Rather, it provides a transparent and intuitive way to cut through noise and ground the valuation discussion in fundamentals. This becomes especially useful during periods of strong market performance and rising investor optimism, when narratives can easily overshadow underlying economics.
Thank you for reading.
Below you can find the model I built—based on Professor Damodaran’s approach—along with all assumptions and data sources used.
Links
Blog
(1) Google: https://panagiotismoutsiopoulos.blogspot.com/
(2) LinkedIn: https://www.linkedin.com/in/panagiotis-moutsiopoulos/
(3) Dataset: https://docs.google.com/spreadsheets/d/1SKqRrObfN9AFpJDfGnjlC6sjEQkTBEn5/edit?usp=drive_link&ouid=110354955877963285731&rtpof=true&sd=true
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