A Market-based valuation is a form of
stock valuation that refers to market indicators, also called extrinsic criteria (i.e. not related to economic fundamentals and account data, which are intrinsic criteria).
Examples of market valuation methods
Technical analysis
Technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sa ...
is the most characteristic market-based method, although it focuses more on timing than pricing.
Also, rough market comparison tools such as the
PE ratio and the
PEG ratio are used. More sophisticated forms of analysis (
fundamental analysis
Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and competitors and markets. It also considers the overall st ...
,
quantitative analysis
Quantitative analysis may refer to:
* Quantitative research, application of mathematics and statistics in economics and marketing
* Quantitative analysis (chemistry), the determination of the absolute or relative abundance of one or more substanc ...
, and
behavioral analysis) use also some market criteria, such as the
risk premium or
beta coefficient.
Those criteria might be "tilted" in some valuation models in anticipation of their possible variation in the next future, or to adapt them to their historical statistical range or
mean
There are several kinds of mean in mathematics, especially in statistics. Each mean serves to summarize a given group of data, often to better understand the overall value ( magnitude and sign) of a given data set.
For a data set, the '' ari ...
.
See also
*
List of valuation topics
*
Price discovery
In economics and finance, the price discovery process (also called price discovery mechanism) is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers.
Overview
Price discovery is di ...
*
Valuation using multiples
*
Valuation using discounted cash flows
*
Valuation using the Market Penetration Model Valuation using the Market Penetration Model (MPM) or the growth potential of a company
is a method of estimating the value of a company by calculating the depth of its market penetration as evidenced by its customer base and industry niche.
The ...
External links
stock image and behavioral finance
Stock market
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