Essential Stock Valuation Methodologies

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1. Price-to-Earnings (P/E) Ratio
Most widely used metric comparing stock price to earnings
Industry average or desired P/E multiple
Current P/E Ratio:
-
Fair Value at Target P/E:
-
2. Discounted Cash Flow (DCF)
Intrinsic value based on future cash flows
Fair Value Per Share:
-
3. Comparable Company Analysis
Value based on peer company multiples
Average EV/Revenue or EV/EBITDA of peers
Fair Value Per Share:
-
4. Price-to-Book (P/B) Ratio
Common for banks and asset-heavy companies
Current P/B Ratio:
-
Fair Value at Target P/B:
-
5. EV/EBITDA Multiple
Popular in M&A and cross-capital structure comparison
Fair Value Per Share:
-
6. Dividend Discount Model (DDM)
For mature dividend-paying stocks
Fair Value Per Share:
-
7. Price-to-Sales (P/S) Ratio
Useful for unprofitable growth companies
Current P/S Ratio:
-
Fair Value at Target P/S:
-
8. PEG Ratio
P/E adjusted for growth - popular for growth stocks
1.0 is considered fairly valued
Current PEG Ratio:
-
Fair Value at Target PEG:
-
9. Precedent Transaction Analysis
Based on past M&A transaction multiples
Average multiple paid in similar deals
Typical 20-30% for acquisitions
Fair Value Per Share (with premium):
-
10. Asset-Based Valuation
Net asset value - for asset-heavy or liquidation scenarios
Goodwill, patents, etc. (optional)
Net Asset Value Per Share:
-

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