Absolute Value

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Dictionary Says

Definition of 'Absolute Value'

A business valuation method that uses discounted cash flow analysis to determine a company's financial worth. The absolute value method differs from the relative value models that examine what a company is worth compared to its competitors. Absolute value models try to determine a company's intrinsic worth based on its projected cash flows.
Investopedia Says

Investopedia explains 'Absolute Value'

In addition to looking at ratios such as price to earnings and price to book value, value investors like to calculate what an entire business is worth when they are considering whether to buy a particular stock. Discounted cash flow models are one way to determine this worth. They estimate a company’s future free cash flows, then discount that value to the present to determine an absolute value for the company. By comparing what a company's share price should be given its absolute value to the price the stock is actually trading it, investors can determine if a stock is currently under or overvalued.
Search results for

'Absolute Value'

  • Equity Valuation In Good Times And Bad

    http://www.investopedia.com/articles/fundamental-analysis/09/equity-valuation-good-bad.asp
    ... Absolute value measures describe value on a stand-alone basis. Relative measures
    are useful when comparing the same measure between two companies. ...

  • Valuing A Company Using The Residual Income Method

    http://www.investopedia.com/articles/fundamental-analysis/11/residual-income-model.asp
    Learn the underlying basics behind the residual income model and how
    it can be used to place an absolute value on a firm. ...

  • How To Read The Market's Psychological State

    http://www.investopedia.com/articles/trading/03/010603.asp
    ... the total long and short contracts in the market on a given day, and the absolute
    value of open interest corresponds to a cumulative long or short position. ...

  • How To Value A Real Estate Investment Property

    http://www.investopedia.com/articles/mortgages-real-estate/11/valuing-real-estate.asp
    ... Equity valuation is typically conducted through two basic methodologies: absolute
    value and relative value. The same is true for property assessment. ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Price Value ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/price-value-basis-point.asp
    Learn how the price value of a basis point can measure the absolute price
    sensitivity of a bond. Provides sample calculations for PVBP. ...

  • What's the difference between absolute P/E ratio and relative P/E ...

    http://www.investopedia.com/ask/answers/05/051005.asp
    ... Relative P/E Relative P/E compares the current absolute P/E to a benchmark or a ... Relative
    P/E usually compares the current P/E value to the highest value of the ...

  • What is an absolute rate?

    http://www.investopedia.com/ask/answers/08/absolute-rate.asp
    ... referred to as "absolute swap yield." The absolute rate is usually determined finding
    the present value of the fixed portion of the interest rate swap. ...

  • Market Breadth: Advance/Decline Indicators | Investopedia

    http://www.investopedia.com/university/marketbreadth/marketbreadth3.asp
    ... It calculates the absolute value of the difference between the number of advancing
    and declining stocks, making it a slight variation on the A/D spread. ...

  • CFA Level 1 Study Guide - Global Economic Analysis - Absolute and ...

    http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/absolute-relative-purchasing-power-parity.asp
    ... 2.6 Net Present Value and the Internal Rate of Return; 2.7 Money Vs ... Pegged Exchange
    Rate Systems; 5.18 Absolute and Relative Purchasing Power Parity; 5.19 Relative ...

  • Discovering the Absolute-Breadth Index and the Ulcer Index

    http://www.investopedia.com/articles/technical/03/030403.asp
    ... easy to understand that the absolute breadth indicator calculates the difference
    between advancing and declining issues and then indicates this value for each ...

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