Jump to content
  • 0

Stock valuation


Fernando Palmer
 Share

Question

1 answer to this question

Recommended Posts

  • 0

Hi Fernando, thanks for your question. 

The difference between the absolute and relative valuation methods is the same as the difference between absolute and general in any context. The absolute method looks at stock and it’s 100% focused on the stock only. Analysts focus on earnings, revenue, market performance, future outlook, etc. 

Contrarily, relative valuation tends to compare the stock with other stocks within the same industry. Hence, analysts wouldn’t be only looking at Facebook, but also at other tech giants from the same sector e.g. Twitter. This way, they compare market performance, earnings per share, price to earnings ratio, etc., to identify best investment opportunities and stocks that are undervalued by the market.


 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. To reply to this question, sign in or create a new account.

Guest
Reply to this question

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...