Other than the CAPM model, Gordon growth model, book value per share, and market price, how could you value a company?

Question

anonymous · Answer

You could try using the relative p/e method, although it's a comparative analysis. First calulate de P/E ratio by dividing the market price of the stock of the company by the company's earnings per share.$$Relative P/E=\frac{ MarketPrice_{Stock} }{ Earnings Per Share }$$Then you calculate this ratio for the company's main competitors (Important: Same industry, similar risk, some find the p/e of all competitors and trim off the extreme quartiles). Using the P/E ratios of all the competitors you find an average (do not include the company you are analysing in this industry average). If you multiply this average times the earnings per share of the company you should get an estimate of the company's price.$$Price_{Stock}=(AverageP/E_{Industry})(Earnings Per Share)$$ 
However keep in mind that as this method depends substantialy on how you construct the industry average relative P/E it can be unreliable on it's own.