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The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit

ISBN: 978-1-118-00477-7
256 pages
May 2011
The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit (1118004779) cover image
An accessible, and intuitive, guide to stock valuation

Valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. In The Little Book of Valuation, expert Aswath Damodaran explains the techniques in language that any investors can understand, so you can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and pick stocks.

Page by page, Damodaran distills the fundamentals of valuation, without glossing over or ignoring key concepts, and develops models that you can easily understand and use. Along the way, he covers various valuation approaches from intrinsic or discounted cash flow valuation and multiples or relative valuation to some elements of real option valuation.

  • Includes case studies and examples that will help build your valuation skills
  • Written by Aswath Damodaran, one of today's most respected valuation experts
  • Includes an accompanying iPhone application (iVal) that makes the lessons of the book immediately useable

Written with the individual investor in mind, this reliable guide will not only help you value a company quickly, but will also help you make sense of valuations done by others or found in comprehensive equity research reports.

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Foreword.

Introduction.

Hit the Ground Running —Valuation Basics.

Chapter One Value – More Than a Number!

Chapter Two Power Tools of the Trade.

Chapter Three Yes, Virginia, Every Asset has an Intrinsic Value.

Chapter Four It's all Relative!

From Cradle to Grave —Life Cycle and Valuation.

Chapter Five Promise Aplenty.

Chapter Six Growing Pains.

Chapter Seven Valuation Viagra.

Chapter Eight Doomsday.

Breaking the Mold —Special Situations in Valuation.

Chapter Nine Bank on It.

Chapter Ten Roller-Coaster Investing.

Chapter Eleven Invisible Value.

Conclusion Rules for the Road.

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Aswath Damodaran is Professor of Finance at New York University's Leonard N. Stern School of Business. He has been the recipient of numerous awards for outstanding teaching, including the NYU university-wide Distinguished Teaching Award, and was named one of the nation's top business school teachers by BusinessWeek in 1994. He has written or coedited numerous books, including Damodaran on Valuation, Investment Valuation, Corporate Finance, Investment Management, Investment Philosophies, and Applied Corporate Finance (all published by Wiley), as well as The Dark Side of Valuation, Investment Fables, and Strategic Risk Taking.
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May 04, 2011
The Little Book of Valuation

A prudent investor needs to value the investment they are considering before buying it. Therefore valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. The average investor has a less intense need for details and is more interested in learning valuation basics that he or she can apply quickly to investments. Using important yet uncomplicated valuation techniques, one can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and select stocks for a portfolio.

In his new book, The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit, financial expert Aswath Damodaran distills the fundamentals of valuation, without glossing over or ignoring key concepts, and develops models that readers can easily understand and implement. He also makes the case that the two popular, and often divergent, approaches (intrinsic and relative) to valuation can be used in tandem. Damodaran discusses how both of these approaches can significantly improve one’s odds by helping to select stocks that are undervalued not only on an intrinsic level but also on a relative basis.

Once becoming familiar with the techniques outlined in this book, readers will be able to value a company with confidence. In addition, The Little Book of Valuation:  

  • Includes illustrative case studies and examples that will help develop valuation skills
  • Puts readers in a better position to determine which investments are on track to add real value to a portfolio
  • Offers valuable valuation insights from one of the foremost experts in this field

Written with the individual investor in mind, this reliable guide will not only allow readers to value a company quickly, but will also help make sense of valuations done by others or found in comprehensive equity research reports. In addition, this definitive “how-to” book of valuation’s approach is one that the average investor can use to value stocks immediately, with a companion website that makes understanding stock valuations easy and intuitive.

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