Valuation FAQs What is Valuation? Valuation is a process by which analysts determine the present or expected worth of a stock, company, or asset. What is the purpose of Valuation? The purpose of valuation is to appraise a security and compare the calculated value to the current market price in order to find attractive investment candidates. Why are there so many different types of Valuation Models? While the current market price is said to reflect all variables (including irrational behavior), valuation models will only factor in a few variables—this is why there are so many different methods of valuation. What are the two categories of Valuation? The two categories of Valuation are absolute valuation, and relative valuation. What are the most common models for determining company value? Three of the most common models for determining a company's value are the Dividend Discount Model (DDM), Discounted Cash Flow Model (DCF), and the Capital Asset Pricing Model (CAPM). About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.