Comparable companys analysis ? Beta ? P/E.

Question

Accepted Answer

Comparable company analysis involves comparing financial ratios and metrics of similar companies to evaluate performance.

Comparable company analysis is a valuation method used to determine the value of a company by comparing it to similar companies in the same industry.
It involves analyzing financial ratios such as price-to-earnings (P/E) ratio and beta to assess the relative valuation and risk of the company.
Beta measures the sensitivity of a stock's returns to changes in the overall market. A beta of 1 indicates the stock moves in line with the market, while a beta greater than 1 suggests higher volatility.
P/E ratio is calculated by dividing the market price per share by the earnings per share. It helps investors assess the company's earnings potential and compare it to its peers.
For example, if a company has a higher P/E ratio compared to its competitors, it may indicate that investors have higher expectations for its future earnings growth.

Accepted Answer

The most common valuation measures used in comparable analysis are enterprise value to sales EV/S . Price to earnings (P/E) price to book (P/B) and price to sales.(P/S) If the company valuation ratio is higher than the peer average the company is overvalued

Comparable companys analysis ? Beta ? P/E.

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