For More Information...

This site has a number of articles related to valuation, including interactive graphs that explain finance math, and a guide to understanding financial statements. (Or for something completely different, you can learn about modern portfolio theory, where the goal is to avoid valuations altogether and instead try to find an efficient mix of index funds.)

When it comes to finding value, the world's greatest investor is also the world's clearest explainer: Warren Buffett's letters to shareholders in the annual reports of Berkshire Hathaway are an ongoing classic.

Extensive valuation articles and spreadsheets are available on pages by two NYU finance professors, Aswath Damodaran and Ian Giddy.


It's hard to find books that cover valuation in a way that's both readable and accurate. One that strikes the right balance (on a lot of topics) is The Ten Day MBA.

If you want something more in-depth, Williams' Theory of Investment Value is still in print. Among modern references, the most popular seems to be Damodaran's Investment Valuation.

The appendix in The Warren Buffett Way gives a discounted earnings analysis of seven different investments Buffett made, with a discussion in the main text on where the numbers are coming from.


It's also interesting to read information packets prepared by companies planning mergers and acquisitions. These usually contain one or more valuation analyses done in different ways. Be aware that some of these may be more "sales job" than "science": their purpose is to reassure shareholders that the upcoming merger makes sense.



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Article Contents
Valuation Intro
A Little Theory
DCF Calculator
P/E Ratio
P/S Ratio
PEG Ratio
Graham Formula
Dividend Discount
Buffett Formula (?)
CAPM Calculator
Books & Links


Also See
Valuation Formula
Stock Market Predictions
Measuring Investment Returns
Stock Market CAGR