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Original, source-based guides to valuation for investors.
20 articles · Original research guides with primary sources and worked examples
A low P/E ratio does not necessarily mean a stock is undervalued. Learn to separate earnings periods, one-time gains and losses, debt, and cash flow to judge whether the price is cheap or reflects declining earnings.
Read article →Book value in PBR differs from what shareholders receive after assets are sold. Learn to interpret a low price-to-book ratio by checking recoverable inventory, receivables, goodwill, and liabilities.
Read article →The relationship between ROE and PBR starts with shareholders’ required return. A simple growth model shows why high ROE must be supported by sustainability and consistent reinvestment assumptions.
Read article →EV/EBITDA helps compare companies with different capital structures, but adjustments affect the result. Learn how to align noncontrolling interests, leases, cash, and the scope of EBITDA.
Read article →Equal revenue can produce different earnings and cash flow. Worked examples explain how to align revenue recognition, normalized margins, and capital structure when using PSR, and how it differs from EV/Sales.
Read article →PEG divides P/E by earnings growth, but does not fully adjust for growth duration, quality, or risk. Learn to align growth assumptions and recognize distortions from losses and low earnings bases.
Read article →DCF depends on matching cash flows with the right discount rate. Hypothetical figures explain FCFF versus FCFE, discounting terminal value, and the bridge from enterprise value to equity value.
Read article →The present value of identical cash flows varies with the discount rate and timing. Learn to distinguish cost of equity from WACC and align currency and inflation assumptions when assessing rate sensitivity.
Read article →Perpetual growth drives value beyond the explicit forecast period. Calculate sensitivity while checking the discount-rate spread, next-year cash flow, and the reinvestment needed to support growth.
Read article →Net debt is interest-bearing debt minus eligible cash. Worked examples explain restricted cash, leases, and noncontrolling interests when bridging operating value to equity value.
Read article →Market capitalization values equity, while EV compares the full capital funding operations. Two companies with different debt and cash balances illustrate how to choose a matching earnings denominator.
Read article →Negative P/E ratios are a poor basis for ranking loss-making companies. Learn to connect unit economics, cash needs before profitability, financing, and failure scenarios in a conditional valuation.
Read article →A low P/E ratio in a cyclical stock may conceal peak earnings. Learn to assess the cycle by separating price and earnings timing, normalized margins, investment needs, and debt obligations.
Read article →Normalized earnings should not retain only favorable results. Learn to adjust gains and losses consistently for recurrence, taxes, scale, and the cycle, and build a reproducible earnings reconciliation.
Read article →Relative valuation depends on the peer group. Reduce selection bias by aligning business models, growth, risk, and accounting, and by distinguishing averages from medians.
Read article →Sum-of-the-parts valuation highlights differences among businesses. Learn to combine operating and equity values while avoiding double-counted subsidiaries and omitted corporate costs.
Read article →Reverse DCF estimates the cash flow needed to explain the current price. Learn to distinguish fixed assumptions from the variables you solve for, rather than treating growth and margins as uniquely determined.
Read article →A margin of safety is the cushion from paying less than estimated value, but does not guarantee protection from losses. Examples explain the different upside denominator, valuation errors, and reassessment.
Read article →Value per share depends on both total equity value and share count. Separate the effects of new share issuance, buybacks, and potential shares, and distinguish average EPS share counts from valuation-date counts.
Read article →A valuation range should reflect assumptions rather than arbitrary upper and lower bounds. Learn to distinguish sensitivity from scenarios and explain the limits of probabilities and medians.
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