Previously：
Absolute valuation: Analysts' secret weapon
Relative valuation: How to compare a stock's worth with its peers?
Stock valuation methods
There are 2 methods for analysts to give enterprises valuations: absolute valuation and relative valuation. How to value listed companies in different industries?
Absolute Valuation
Dividend Discount Model (DDM)
The dividend discount model(DDM) calculates the "true" value of a firm based on the dividends the company pays its shareholders.
DDM is a very effective way of valuing matured blue chip companies in well-developed industries. These companies have to pay a dividend, and the dividend is stable and predictable.
Discounted Cash Flow Model (DCF)
If the company doesn't pay a dividend or its dividend pattern is irregular, then the company should use the discounted cash flow (DCF) model.
DCF is a calculation designed to evaluate a company's current value by projecting its future free cash flows, operating costs, revenues, and growth.
But these values are easier to accurately predict with larger, more firmly established companies that have steady growth histories on which to base these projections, such as utilities, banking, and energy sectors like oil and gas.
Relative Valuation
Price-to-Earnings Ratio (P/E Ratio)
P/E ratios are used by inves...

By Jimmy
Good morning moomooers! Here are things you need to know before the opening bell:
- U.S. stock futures were higher in early morning trading on Thursday as investors gear up for the second half of 2021.
- Stocks making the biggest moves in the premarket: Nio Inc, Marin Software, Adamis Pharmaceuticals&more
Market Snapshot
U.S. stock futures were higher in early morning trading on Thursday as investors gear up for the second half of 2021.
...