The DCF model follows the principle that a firm’s “true” value today is equal to the sum of all its the future free cash flows (FCF) it will make in the future (to infinity). Since the hardest part of ...

Relative valuation—using simple metrics to compare a firm’s value to its peers—is a cornerstone of financial decision-making. If a company earns $2 billion in profit, and if similar firms trade at 15 ...

Sham Gad is a seasoned and well-respected financial journalist, as well as an expert in a wide variety of financial topics. Gordon Scott has been an active investor and technical analyst or 20+ years.

Joseph Nguyen is a contributing author at Investopedia and a research analyst with experience at a securities brokerage firm. Thomas J. Brock is a CFA and CPA with more than 20 years of experience in ...

The PE (price to earnings ratio) of a stock is 18. Is that cheap or expensive? Well, it depends. On what? Many things! Welcome to the world of relative valuation. The findings from research done a ...

For some, stock trading is tantamount to gambling, but it can be argued that investment is the art and science of making an informed decision about adding one's money into — or removing it from — an ...

Valuation determines the current or future worth of businesses, blending science and art. Investors use intrinsic and relative valuation methods to gauge investment value. Warren Buffett's profitable ...