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What's it worth? And why?
These are the questions people ask about companies when they want to invest, and valuation analysis attempts to answer 'em.
How we get to the valuation analysis is another story. Some people use charts or formulas or ratios. Some compare a company's earnings to an index or an average company. Some use Discounted Cash Flow Analysis. Some seem to pick a number out of a hat.
Bottom line: It's not an exact science.