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Learn how to value and analyze stocks effectively.

Discover 8 of the

Best Stock Valuation Methods to Value Any Stock

03

STOCK VALUATION TYPE

Determining the market expectation by doing a DCF in reverse 

DESCRIPTION

It has its weaknesses and advantages which is discussed in the link below, but overall, it is a highly effective stock valuation method to value predictable companies. Making realistic projections to test a range of valuation scenarios is key.

04

DESCRIPTION

A backwards stock valuation to find what the market is expecting from the stock.


Instead of entering the future growth rate, the goal is to find out what the market is expecting the stock to achieve.

WHEN TO USE

Companies with consistent free cash flow, predictable companies.

STOCK VALUATION TYPE

Cash flow stock valuation by predicting future cash flows

WHEN TO USE

Any situation when you want to figure out what the market is expecting from the stock.

STOCK VALUATION TYPE

Multiples valuation using income statement assumptions

05

DESCRIPTION

Instead of basing your stock valuation on what a competitor is being valued as the benchmark, the multiple is calculated based on the business fundamentals. Created by Vitaliy Katsenelson, author of ACTIVE VALUE INVESTING.

06

DESCRIPTION

Used by many on Wall Street and a good back of the envelope stock valuation method. It has the advantage of being simple and concise. EBIT is the main driver of the valuation which makes it applicable for all companies.

WHEN TO USE

Companies with positive earnings

STOCK VALUATION TYPE

PE Multiples based on fundamentals

WHEN TO USE

All stocks with positive Earnings Before Interest and Tax

07

STOCK VALUATION TYPE

Income statement adjustments for earnings

EARNINGS POWER VALUE

DESCRIPTION

This stock valuation method is best used in conjunction with the Asset Reproduction Value method. It is a technique for valuing stocks by making an assumption about the sustainability of current earnings and the cost of capital.

The version used at old school value does not factor in any growth.

STOCK VALUATION TYPE

Multiples valuation using income statement assumptions

08

WHEN TO USE

Calculate asset value by making adjustments to the balance sheet. Also used to see how much a competitor would have to spend in order to replicate the company's business.

DESCRIPTION

In a way, this is a health and moat test. If the value of the balance sheet after making adjustments is strong, the company is protected by its assets. This value makes it easy to identify the floor for the stock.

If the asset reproduction value is high, then new entrants will have difficulty entering the market.

WHEN TO USE

For all companies but even better for cyclical, volatile, and young companies.

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