There are many accepted valuation models for valuing a common share. While we do attempt to discuss them in detail, a few of the more common assessment measures are:
For a more detailed discussion of these valuation measures, refer to the corresponding FAQs below.
Note: The majority of present day valuation metrics make a fundamental and important assumption that financial markets are not very good at assessing the true value of common shares. This is why the analysts use different valuation metrics to explain why the share’s market price is not correct. The analysts use the valuation metrics to help explain why the share’s current market price is Cheap/Undervalued or Expensive/Overvalued.