What is a Relative Valuation?

Описание: A relative valuation relies on the use of ratios in comparable industries and asset classes. The relative valuation approach estimates the value of an asset using ratios. The ratio is determined based on price and on the specified relevant measure.

There are a series of ratios that are used to determine if an asset is undervalued or overvalued. Let us keep in mind that the focus is on finding value and that means that the interpretation of these ratios is going to be different in comparison to growth-oriented investors.

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DISCLAIMER: I’m not a financial adviser. These videos are for educational purposes only to share my own opinions with no guarantee of gain or losses. No official financial advice is being given. Please always check with a professional before making any investments or financial decisions.