Which stock valuation method is easiest for absolute beginners?
Hey everyone!
I've been trying to learn about stock valuation methods, but I'm honestly getting overwhelmed by all the different approaches. P/E ratios, discounted cash flow, PEG ratios... my head is spinning! 😅
As someone who's just starting out, I'm wondering which valuation method you'd recommend learning first? Would love to hear what worked for you when you were first starting out!
Thanks in advance!
1 Answer
Yes, indeed, there’s a ton of info out there, and it can feel overwhelming at first.
I’d suggest starting with the P/E ratio. It’s simple and widely used, and you can get a lot of insight by comparing it to:
• the sector average
• competitors' P/E ratios
• the company’s own historical P/E
Just keep in mind—a low P/E isn’t always a green light to buy. It might mean there are concerns about the company, so it’s worth digging deeper. Still, it’s a great starting point for understanding valuation. Once you’re comfortable with that, you can look into things like PEG or DCF. No rush—just take it one step at a time!