Stock Analysis: Apples and Oranges
by Ajay Jindal/ ET BB
Analyst reports typically don’t compare valuations across sectors. But investors have to make such comparisons every time they buy stocks.
Relative valuation is by far the most common way of understanding company prices than absolute methods like dividend discount or discounted cash flows. In this method, the common way to peg a company’s valuations is to compare it with other companies.
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