Valuation: Principles and Practice: Part 1 – Relative Valuation. 03/03/08 Ch. 12. Valuation techniques. Relative valuation the value of an asset is derived from the pricing of 'comparable' assets, standardized using a common variable such as earnings, book value or revenues.
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Valuation: Principles and Practice: Part 1 – Relative Valuation
Comparable multiple * Firm-specific denominator value
where the denominator value can be earnings, book value, sales, etc.
P/E divided by expected earnings growth (%).