When you start exploring the world of investing, one of the most important skills you need to master is understanding company valuations. Whether you’re a beginner looking for a stock market course in Dehradun or someone already taking stock market classes, knowing how to read valuations can help you make smarter trading and investing decisions.

🔹 What Is Company Valuation?

Company valuation is the process of determining how much a business is worth. Investors use it to decide if a stock is overvalued, undervalued, or fairly priced. Learning this is an essential part of any learn stock trading program.

🔹 Key Valuation Methods Every Trader Should Know
1. Price-to-Earnings (P/E) Ratio

Formula: Price per Share ÷ Earnings per Share (EPS)

A high P/E might indicate a growth company, while a low P/E could signal undervaluation or weak growth prospects.

1. Price-to-Book (P/B) Ratio

Formula: Market Price ÷ Book Value per Share

Helps you understand how the market values the company compared to its actual assets.

1. EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization)

A more advanced tool often covered in stock market training courses.

Useful for comparing companies in capital-intensive industries.

1. Discounted Cash Flow (DCF) Analysis

Focuses on future cash flows and discounts them back to today’s value.

Considered one of the most professional ways to assess a company’s true worth.

🔹 Why Learning Valuation Matters

If you’re interested in intraday trading or long-term investing, understanding valuations helps you:

Avoid overpriced stocks.

Identify hidden gems before the crowd.

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