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Valuation Ratios
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Valuation ratios help determine if a stock is fairly priced relative to its earnings, book value, or cash flow. Key ratios include P/E, P/B, EV/EBITDA, and EV/Sales. A lower ratio may indicate undervaluation, but always compare within the same industry.
Key Formulas & Examples
- P/E Ratio = Price / Earnings per Share
- P/B Ratio = Price / Book Value per Share
- EV/EBITDA = Enterprise Value / EBITDA
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