Multiples Approach

Categories: Company Valuation

Multiples approach...to investing.

At what multiple of earnings should this stock trade? What multiple of revenues or cash flow? What is its price-to-earnings-to-growth ratio? When you're paying $20 per share for a company with $1 in earnings, what does that mean? Is it a good price? A bad one?

That's the multiples approach. What multiple of what metric you should be paying to purchase a given security.

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