From the course: Excel for Investment Professionals
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Reviewing multiples and stock valuation - Microsoft Excel Tutorial
From the course: Excel for Investment Professionals
Reviewing multiples and stock valuation
- [Instructor] Building investment portfolios is easier if we use multiples to assess risk and return. Multiples allow us to go through and assess the relative value of a company. The reality is that oftentimes rather than being able to do a full version of a valuation model, we instead want to turn to some sort of a multiple or comparison between a stock's price and some other fundamental metric about the company. This is easily done in Excel. Now, there are a variety of multiples out there, but three of the most common ones that you'll run into, which we'll talk about in this course, are the price-to-earnings ratio, the price-to-book value ratio, or price-to-book ratio, and the price-to-sales ratio. These three multiples all give us a sense for what the stock's market price looks like compared to its underlying intrinsic value based on its financial performance. Now, there's a lot of other multiples that are out there. You'll run into everything from multiples based on the number of…
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