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FREE DCF, Graham & DuPont Investment Calculators

Learn how to value and analyze stocks effectively.

Discover 8 of the Best Stock Valuation Methods to Value Any Stock

STOCK VALUATION TYPE

Balance sheet and tangible asset stock valuation

WHEN TO USE

Liquidation valuation, net net stocks, and when trying to determine the stock price relative to a stock’s net assets. Does not work well for service or low asset companies such as software.

DESCRIPTION

When Ben Graham was around, the main types of businesses that existed were industrial businesses. Mainly factories, manufacturers and retailers. There were no consulting, software, or high tech companies you see today. He would analyze the balance sheet and invest in stocks with high tangible assets as it protected the downside.

STOCK VALUATION TYPE

Balance sheet and tangible asset stock valuationd

WHEN TO USE

Cyclical companies, volatile cash flows, growth stocks, and young companies investing in growth.

DESCRIPTION

Ben Graham was a balance sheet investor first and foremost, but he created this formula to simulate growth investing with value investing principles.

STOCK VALUATION TYPE

Cash flow stock valuation by predicting future cash flows

WHEN TO USE

Companies with consistent free cash flow, predictable companies.

DESCRIPTION

It has its weaknesses and advantages which is discussed in the link below, but overall, it is a highly effective stock valuation method to value predictable companies. Making realistic projections to test a range of valuation scenarios is key.

STOCK VALUATION TYPE

Determining the market expectation by doing a DCF in reverse 

WHEN TO USE

Any situation when you want to figure out what the market is expecting from the stock.

DESCRIPTION

A backwards stock valuation to find what the market is expecting from the stock.Instead of entering the future growth rate, the goal is to find out what the market is expecting the stock to achieve.

STOCK VALUATION TYPE

PE Multiples based on fundamentals

WHEN TO USE

Companies with positive earnings

DESCRIPTION

Instead of basing your stock valuation on what a competitor is being valued as the benchmark, the multiple is calculated based on the business fundamentals. Created by Vitaliy Katsenelson, author of ACTIVE VALUE INVESTING.

STOCK VALUATION TYPE

Multiples valuation using income statement assumptions

WHEN TO USE

All stocks with positive Earnings Before Interest and Tax

DESCRIPTION

Used by many on Wall Street and a good back of the envelope stock valuation method. It has the advantage of being simple and concise. EBIT is the main driver of the valuation which makes it applicable for all companies.

STOCK VALUATION TYPE

Multiples valuation using income statement assumptions

WHEN TO USE

Calculate asset value by making adjustments to the balance sheet. Also used to see how much a competitor would have to spend in order to replicate the company’s business.

DESCRIPTION

In a way, this is a health and moat test. If the value of the balance sheet after making adjustments is strong, the company is protected by its assets. This value makes it easy to identify the floor for the stock.

If the asset reproduction value is high, then new entrants will have difficulty entering the market.

STOCK VALUATION TYPE

Income statement adjustments for earnings

WHEN TO USE

For all companies but even better for cyclical, volatile, and young companies.

DESCRIPTION

This stock valuation method is best used in conjunction with the Asset Reproduction Value method. It is a technique for valuing stocks by making an assumption about the sustainability of current earnings and the cost of capital.The version used at old school value does not factor in any growth.

I Use These 3 Valuation Methods Daily to Fatten My Portfolio

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