Complete Guide To Corporate Finance

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Stock Valuation - Introduction To Stock Valuation

When trying to figure out which valuation method to use to value a stock for the first time, most investors will quickly discover the overwhelming number of valuation techniques available to them today. There are the simple-to-use ones, such as the comparables method, and there are the more involved methods, such as the discounted cash flow model. Which one should you use?

Unfortunately, there is no one method that is best suited for every situation. Each stock is different, and each industry sector has unique properties that may require varying valuation approaches. Here, we'll provide an overview of the two basic categories of stock - common and preferred - and then discuss how to value each.

Common Stock Features


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  1. Comparable Transaction

    A method of valuing a company that is for sale. Comparable transactions ...
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  4. Historic Pricing

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  5. Absolute Value

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  6. Abnormal Earnings Valuation Model

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RELATED FAQS
  1. Can preferred stocks be traded like common stocks? Are their prices the same?

    First, let's look at the differences and similarities between common stocks and preferred stocks. Both represent a piece ... Read Answer >>
  2. What is the difference between economic value and market value?

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  3. What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
  4. Why do preferred stocks have a face value and why is it different than market value?

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  5. What is the difference between the equity market and the stock market?

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  6. When does a growth stock turn into a value opportunity?

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