Valuation
Plain-English guides with worked examples: how to read financial statements, value a business, use technical indicators and manage risk. See the complete Financial knowledge series →
All 154Market basics 15Trading and market structure 16Reading financial statements 15Ratios and business quality 15Valuation 15Advanced valuation and methods 15Technical analysis 15Portfolio, risk and behaviour 15Economy, sectors and the calendar 22Commodities 2Forex 5Hedge funds 3Rates and macro 1
Valuation5 min read
Price-to-earnings (P/E) ratio: what it tells you and what it does not
Learn how the P/E ratio is calculated, how to read it against growth and peers, and why a low or high number alone never settles whether a s...
Read the article →
Valuation4 min read
Forward P/E vs trailing P/E
Understand how trailing and forward P/E differ, what the gap between them implies about expected growth, and how to compare them without mix...
Read the article →
Valuation4 min read
The PEG ratio: pairing P/E with growth
The PEG ratio divides a stock's P/E by its expected earnings growth. Learn how to compute it, where the rule of thumb comes from, and why it...
Read the article →
Valuation4 min read
Price-to-sales ratio: valuing companies without profits
Price-to-sales compares market value with revenue. Learn the formula, how margins link it to P/E, and why a low P/S is not automatically a b...
Read the article →
Valuation4 min read
Price-to-book ratio: when book value is a useful anchor
Price-to-book compares a stock's price with accounting net worth. Learn when book value is a meaningful anchor, such as for banks, and when...
Read the article →
Valuation4 min read
Enterprise value, EV/EBITDA and EV/EBIT
Learn how enterprise value is built from market cap, debt and cash, and how EV/EBITDA and EV/EBIT compare companies with different amounts o...
Read the article →
Valuation4 min read
Price-to-free-cash-flow and FCF yield
Price-to-free-cash-flow and FCF yield measure what you pay for the cash a business has left after investment. Learn the formulas, a worked e...
Read the article →
Valuation4 min read
Dividend yield explained, including the high-yield trap
Dividend yield is annual dividends divided by price. Learn how it is calculated, why a very high yield can signal trouble, and how to test w...
Read the article →
Valuation4 min read
Discounted cash flow (DCF) basics, step by step
A DCF values a business as the present value of the cash it will produce. Follow the five steps with a worked example and see why the inputs...
Read the article →
Valuation8 min read
Terminal value in a DCF: formula, methods and an example
Terminal value captures all cash flows beyond a DCF's forecast period and often drives most of the result. Learn the two methods and how sen...
Read the article →
Valuation4 min read
Discount rates and the CAPM
The discount rate turns future cash into today's value, and the CAPM is the standard way to set the cost of equity. Learn the formula, its i...
Read the article →
Valuation4 min read
Beta explained: measuring a stock's sensitivity to the market
Beta measures how strongly a stock's returns have moved with the overall market. Learn how it is estimated, how to read it, and what it leav...
Read the article →
Valuation7 min read
Equity risk premium explained: formula and estimates
The equity risk premium is the extra return investors expect for holding stocks over risk-free bonds. Learn the three ways to estimate it an...
Read the article →
Valuation5 min read
Margin of safety: Graham's rule for imperfect estimates
Margin of safety means buying only at a meaningful discount to a conservative estimate of value. Learn the formula, the logic and how large...
Read the article →
Valuation5 min read
Intrinsic value vs market price
Price is what the market pays today; intrinsic value is what a business is worth based on the cash it can produce. Learn why they differ and...
Read the article →
Educational only, not financial advice.