Tips & Tricks: Introduction to Valuation

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Valuing a stock – for many people, it is the hardest part of investing. How do you put a specific dollar value on a stock?

Both of us at Equity Mates have found this the most difficult part of learning to invest. So in this episode, we break down what we’ve learned over the past 3 years of this podcast.

In this episode you will learn:

  • The different types of value investors talk about: enterprise value, book value and market value
  • The difference between relative valuation and absolute valuation
  • Different methods of relative valuation – price-to-earnings, price-to-sales and price-to-book
  • The theory about absolute valuation
  • Three methods of absolute valuation we won’t be discussing (but you’re welcome to Google if interested)
  • Discount cash flow (DCF) – what it means and what you need to know
  • Reverse DCF – a twist on your discount cash flow
  • The effect that changing your assumptions can have on your valuation (a.k.a why you need to take the price you get with a grain of salt)
  • Roger Montgomery’s valuation method in his book Value.Able

Resources Discussed:

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Equity Mates Investing Podcast is a part of the Diamantina Media Network – the home of Australia’s favourite podcasts.

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