Relative Valuation Part 1-Introduction
This column is written by @gordon_ong.
-Gordon has a demonstrable interest in equity investments, financial markets, and negotiating deals. As @NTUInvestmentClub president, he has an understanding of what factors drive an organisation’s success.
—
What is Relative Valuation? Relative Valuation is a quick way to compare assets to the price of similar assets in the market. Multiples are just standardised estimates for the value of the company. Just like you compare data plans between Telecoms, relative valuation compares the company price to what you are getting in return (e.g. revenue, earnings, dividends, cash flow, book value, etc). To compare between data plans, you may come up with a multiple called Price (per month)/Data to see which data plan is the most value-for-money. …
