Stock valuation methods
Understanding how to value a stock is crucial for making informed investment decisions. There are various methods for stock valuation, and two common approaches are:
  • Dividend Discount Model (DDM): This method values a stock based on the present value of its future dividend payments. It’s often used for companies that pay consistent dividends.

  • Price/Earnings (P/E) Ratio: This ratio compares a company’s stock price to its earnings per share. It gives an indication of how much investors are willing to pay for each dollar of earnings.

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