facebookOther than using the traditional P/E and P/B ratio, what are the other ways to find the fair value of a stock? - Seedly

Lee Jin Xing

14 May 2021

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Other than using the traditional P/E and P/B ratio, what are the other ways to find the fair value of a stock?

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Hi Jin Xing, other than price-to-earnings (P/E) and price-to-book (P/B) ratios, there are ratios such as price-to-free cash flow (P/FCF). You can check out this article for a breakdown of the various valuation metrics.

There's also the slightly more advanced discounted cash flow method and dividend discount models.

Valuations are more art than science. More importantly, the business we invest in must be of quality. I talked about valuation of tech stocks in my article here and how I think about this topic. Hope this helps.

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