Stock Valuation Techniques

Description
This video explains the methods of Earnings Power Value, Graham value, PE Based valuation, and the Dividend Discount Model.

Relative Valuation

When referring to relative valuation, common practice is to compare a stock's valuation with either that of other stocks, or with the historical valuations of the company itself. The idea is that similar assets should technically sell at a similar price, and relative valuation is usually implemented with the use of price multiples.

Quick and Easy

The concept of relative valuation is relatively basic and easily understood: a company's value is determined relative to how resembling companies are priced in the market. The following method demonstrates how you do a relative valuation on a company that is publicly listed:

-Make up a list of comparable companies- usually industry peers- and get a hold of their market values.
-Use these market values to convert into trading multiples that are comparable, such as price-to-book, P-E, EV-EBITDA, and enterprise-to-value-to-sales.
-Compare the multiples of the company with the company multiples of its peers to evaluate whether the firm is under or over-valued.

Length: 20 minutes 15 seconds