facebookWhat is the best way to value a stock? - Seedly

Anonymous

18 Apr 2019

Stocks

What is the best way to value a stock?

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When valuing a stock you can use either the absolute valuation model or the relative valuation model. the abosulte valutaion model attempt to find the intrinsic or "true" value of an investment based only on fundamentals. while the relative valuation models operate by comparing the company in question to other similar companies.

The absolute valuation model include looking at the dividend discount model, discounted cash flow model, residual income model, and asset-based model.

While the relative valuation model involve calculating multiples and ratios, such as the price-to-earnings multiple, and comparing them to the multiples of similar companies.

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