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Valuation models
Discover how analysts estimate a company's true worth using DCF, multiples, and intrinsic value methods.
Discounted Cash Flow (DCF)
The DCF model estimates value by projecting future cash flows and discounting them to the present using a required rate of return.
Intrinsic Value = Σ [ Free Cash Flow_t / (1 + r)^t ]
Multiples & Comparables
This approach values a company by comparing it to similar businesses using ratios like P/E, EV/EBITDA, or P/S.
- Price-to-Earnings (P/E) Ratio
- Enterprise Value / EBITDA
- Price-to-Sales (P/S)
Intrinsic Value
Intrinsic value represents the “true” worth of a business based on fundamentals rather than current market prices. It helps investors identify undervalued or overvalued stocks.