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Professor Aswath Damodaran shares his approach to valuing stocks

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Excerpt from Bloomberg -- "Value and price are two different things, you can either value a stock or you can price a stock....here is the contrast, the price of a stock is determined by demand and supply, mood and momentum and so when you use price earning ratios, and comparable firms and future earnings, you are pricing a company. To value a company you got to go back to basics. The value of a company is built on three pillars. It's cash flows, it's growth, and it's risk. We can dance around those three as much as we want but those are the three driving forces that drive the value of a company."

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