The Little Book of Valuation

In The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit, "Dean of Valuation" Professor Aswath Damodaran distills the fundamentals of valuation, without glossing over or ignoring key components, and develops models that investors can understand easily and use quickly with relatively few inputs to pick winning companies to invest in. In the process, he covers all of the different approaches to valuation--intrinsic or discounted cash flow valuation, multiples or relative valuation, and even some elements of real option valuation. Readers will not only be able to value a company quickly but will also be able to look at valuations done by others or equity research reports and discern whether or not they make sense. The book explores value drivers for different categories of company and explains why each value driver is pertinent for each category. Categories covered include young growth, growth, mature, and declining companies, financial service firms, and intangible asset companies, with corresponding value drivers like revenue and scaling growth, equity risk, and nature of intangible assets. Damodaran complements the book with uValue, an iPhone/iPad app that makes understanding stock valuations easy and intuitive. Readers can enter numbers relating to a company (or link up to a data service that will pull up the numbers) and get a quick estimate of its intrinsic and relative values. Updated case studies and examples help investors build their own intuition and understanding of how to value stocks and companies. The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit earns a well-deserved spot on the bookshelves of analysts, practitioners, and individual investors looking to develop a more nuanced and accurate approach to valuation and access simple but extremely effective valuation tools and formulas for success.