Valuation
method for a stock Great question! There are several valuation methods for stocks because each method offers a different perspective on a stock's value, and no single method is perfect for every situation. Here are the main categories: Absolute Valuation Methods : These methods attempt to find the intrinsic or "true" value of a stock based on its own financial fundamentals. Examples include the Dividend Discount Model (DDM) , Discounted Cash Flow (DCF) Model , Residual Income Model , and Asset-Based Model . Relative Valuation Methods : These methods compare the stock to similar companies in the same industry. Common examples are the Price-to-Earnings (P/E) Ratio , Price-to-Book (P/B) Ratio , and Comparable Company Analysis . Each method has its strengths and weaknesses, and often, analysts use multiple methods to get a more comprehensive view of a stock's value. This helps them make more informed investment decisions. Does that help clarify things a bit? y Fantastic!...