agentii-ai Residual Income / Economic Value Added (EVA) Valuation
Values a company as: Book Value + Present Value of Future Economic Profit. Economic profit = earnings ABOVE the required return on equity. Especially valuable for financial institutions (banks, insurers) where DCF is problematic due to the nature of debt (it's inventory, not capital) and for capital-intensive firms. Also known as the Edwards-Bell-Ohlson (EBO) model in academic literature.
Preflight
Run the canonical pre-flight sequence — MCP health probe, ticker resolution, workspace style.md override, memory load, and coverage check. See contracts/preflight.md.
Include the X-Agentii-Trace header on every tool call per contracts/x-agentii-trace-header.md.
Triggers
- residual income valuation {ticker}
- EVA valuation {ticker}
- economic value added {ticker}
- excess return model {ticker}
- book value plus economic profit {ticker}
- EBO model {ticker}
- bank valuation model {ticker}
- financial institution valuation {ticker}
- value {ticker} residual income
- RI valuation {ticker}
Defaults
| Parameter | Default | Notes |
|---|---|---|
| projection_years | 5 | Years of explicit residual income forecast |
| terminal_growth | 2.5% | Perpetual RI growth (should be conservative) |
| cost_of_equity | CAPM | Ke = Rf + β × ERP, or manual input |
Methodology
Retrieval Scope
structured_only — Residual Income uses book value from XBRL + earnings estimates + current price.
Retrieval Strategy
See contracts/retrieval.md for the canonical decision tree; skill-specific retrieval detail is in references/methodology.md.
Temporal Scope
Default lookback: 4 fiscal quarter(s); maximum: 20. The default balances recency against the trend window this analysis requires.
Tool Allowlist
Per frontmatter allowed_tools:
search_xbrl_facts— primary structured financial facts (is_primary default)get_realtime_quote— latest market price for valuation cross-checkssearch_earnings_calendar— EPS actual/estimate/surprise + report dates
Protocol
Step-by-step execution detail is in references/methodology.md.
When to Use Residual Income vs. DCF
| Company Type | Preferred Model | Why |
|---|---|---|
| Banks, Insurers | Residual Income | Debt is inventory, not capital — DCF doesn't work |
| Capital-Intensive Industrials | Residual Income | Asset-heavy; book value is meaningful |
| Asset Managers | Residual Income | AUM-based; book value + fee earnings |
| Tech, SaaS, Pharma | DCF | Asset-light; cash flow focus |
| Mature Dividend Payers | DDM | Dividends are the primary return mechanism |
| High-Growth, No Earnings | Revenue-based DCF | No earnings or book value to anchor |
Output File
Write the final deliverable to {ticker}/{YYYY-MM-DD_HHMM}_residual-income_{affix}.md.
Output Structure
The deliverable is a structured markdown report written to the path in ## Output File. Full section-by-section template (headings, tables, and field definitions) lives in references/output-structure.md. Required elements:
- Executive Summary — headline conclusions (≤200 words).
- Core analysis sections — per this skill's methodology and analyst modes.
- Data classification — tag findings
[FACT]/[DEDUCTED]/[VIEW]percontracts/snapshot-synthesis.md. - Coverage Gaps & Citations — inline
/v/citations are PRIMARY (immediately after each fact); the bottom Citations section is a non-duplicative roll-up index. - Output frontmatter — emit the FR-090 structured block per
contracts/output-frontmatter-schema.md.
Citations & memory: follow contracts/citation-and-memory.md — ≥1 citation per 200 words; every material fact, table row, and metric is immediately followed by its inline clickable https://agentii.ai/v/{ticker}/{citation_id}/{N} link; a bottom Citations section provides a non-duplicative roll-up index; the closing TUI reply includes a compact Key Citations list (headline 5–10 facts) of clickable /v/ URLs; and append the run to agentii.md per contracts/agentii-md-schema.md.
Validation Gates
- RI convergence: residual income must not grow perpetually above Ke. If failed: terminal growth g must be < Ke by at least 2%.
- Book value consistency: BV_t = BV_t-1 + NI_t - D_t must hold for all forecast years. If failed: refuse delivery; check arithmetic.
- Economic plausibility: fair value P/B between 0.1x and 10x. If failed: flag extreme assumptions.
Tool Fallbacks
Per-tool failure modes and fallback actions are tabulated in references/tool-fallbacks.md.
Memory & Snapshot
- Memory load (pre-flight): load prior workspace context for the ticker before retrieval — see
contracts/memory-load.md. - Structured output frontmatter: emit the FR-090 block (
key_metrics,conclusions,facts_count,deducted_count,views_count,citation_count) percontracts/output-frontmatter-schema.md. - Snapshot synthesis: after writing the deliverable, update the two-tier snapshot and classify findings as
[FACT]/[DEDUCTED]/[VIEW]— seecontracts/snapshot-synthesis.md. - Session archival: record the run under
sessions/{YYYY-MM-DD}/and updatesessions/INDEX.mdpercontracts/session-format.md.
Final Summary (TUI)
End the closing chat reply with a compact Key Citations list (headline 5–10 facts), each a clickable https://agentii.ai/v/{ticker}/{citation_id}/{N} link, so the user can cmd+click straight to the exact SEC page. See contracts/citation-and-memory.md.
Error Handling
| Failure Mode | Action | User-Facing Message |
|---|---|---|
| Negative book value | Halt | "Book value is negative — Residual Income model not applicable. Use DCF." |
| No earnings data | Halt | "Insufficient earnings data for {ticker}." |