shreyya singh
1 post
Sep 01, 2025
10:57 PM
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When you start exploring the world of investing, one of the most important skills you need to master is understanding company valuations. Whether you’re a beginner looking for a trading course in Dehradun or someone already taking stock market classes, knowing how to read valuations can help you make smarter trading and investing decisions.
?? What Is Company Valuation?
Company valuation is the process of determining how much a business is worth. Investors use it to decide if a stock is overvalued, undervalued, or fairly priced. Learning this is an essential part of any learn stock trading program.
?? Key Valuation Methods Every Trader Should Know
1. Price-to-Earnings (P/E) Ratio
Formula: Price per Share ÷ Earnings per Share (EPS)
A high P/E might indicate a growth company, while a low P/E could signal undervaluation or weak growth prospects.
2. Price-to-Book (P/B) Ratio
Formula: Market Price ÷ Book Value per Share
Helps you understand how the market values the company compared to its actual assets.
3. EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization)
A more advanced tool often covered in stock market training courses.
Useful for comparing companies in capital-intensive industries.
4. Discounted Cash Flow (DCF) Analysis
Focuses on future cash flows and discounts them back to today’s value.
Considered one of the most professional ways to assess a company’s true worth.
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