Glossary · Valuation

Relative valuation

Comparing a company’s multiples (P/E, EV/EBITDA, P/S) with similar companies.

Why it matters

A stock can look cheap on its own and expensive against peers that grow faster or earn more.

How to read it

Compare multiples together with margins and growth: a premium is fair when the business is better.

Related

P/E ratioShare price divided by the last 12 months of earnings per share.PeersCompanies that compete in the same business.

In the Cluenex app, this explanation opens next to every relative valuation figure, with the live reading for the stock you are looking at. Open it in Cluenex