What is a 'Valuation Analysis'
A form of fundamental analysis that looks to compare the valuation of one security to another, to a group of securities or within its own historical context. Valuation analysis is done to evaluate the potential merits of an investment or to objectively assess the value of a business or asset.
Valuation analysis is one of the core duties of a fundamental investor, as valuations (along with cash flows) are typically the most important drivers of asset prices over the long term.
BREAKING DOWN 'Valuation Analysis'
Valuation analysis should answer the simple, yet vital, question of, "What is something worth?" The analysis is then based on either current projections or projections of the future. While investors can agree on a metric like the current pricetoearnings ratio (P/E ratio), how to interpret a given valuation can and will differ among those same investors.
Many types of valuation methods are used, involving several sets of metrics. For equities, the most common valuation metric to use is the P/E ratio, although other valuation metrics include: Price/Earnings, Price/Book Value, Price/Sales, Enterprise Value/EBIDTA, Economic Value Added and Discounted Cash Flow.

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How do I value the shares that I own in a private company?
Share ownership in a private company is usually quite difficult to value due to the absence of a public market for the shares. ... Read Answer >> 
Which metric should I pay more attention to, EV/EBITDA or P/E?
Examine and compare the relative advantages and disadvantages of the two equity evaluation metrics, EV/EBITDA and the pricetoearnings ... Read Answer >> 
What is the difference between booktomarket ratio and cash flow to price?
Learn about the differences between the booktomarket ratio and cashflowtoprice ratio, as well as in which contexts investors ... Read Answer >> 
Is it better to use fundamental analysis, technical analysis or quantitative analysis ...
Understand the difference between fundamental, technical and quantitative analysis, and how each measurement helps investors ... Read Answer >> 
What role does ratio analysis play in valuing a company?
Learn about the role of ratio analysis in determining company value, including some of the most common ratios used by modern ... Read Answer >> 
Besides free cash flow to equity (FCFE), what are other metrics for estimating a ...
Learn about metrics used to calculate a company's value, including capital expenditure, revenue expenditure, pricetoearnings ... Read Answer >>