In The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit Updated Edition, “Dean of Valuation” Professor Aswath Damodaran distills the fundamentals of valuation, without glossing over or ignoring key components, and develops models that investors can understand easily and use quickly with relatively few inputs to pick winning companies to invest in. In the process, he covers all of the different approaches to valuation―intrinsic or discounted cash flow valuation, multiples or relative valuation, and even some elements of real option valuation. Readers will not only be able to value a company quickly but will also be able to look at valuations done by others or equity research reports and discern whether or not they make sense.
The book explores value drivers for different categories of company and explains why each value driver is pertinent for each category. Categories covered include young growth, growth, mature, and declining companies, financial service firms, and intangible asset companies, with corresponding value drivers like revenue and scaling growth, equity risk, and nature of intangible assets.
Damodaran complements the book with uValue, an iPhone/iPad app that makes understanding stock valuations easy and intuitive. Readers can enter numbers relating to a company (or link up to a data service that will pull up the numbers) and get a quick estimate of its intrinsic and relative values.
Updated case studies and examples help investors build their own intuition and understanding of how to value stocks and companies.
The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit earns a well-deserved spot on the bookshelves of analysts, practitioners, and individual investors looking to develop a more nuanced and accurate approach to valuation and access simple but extremely effective valuation tools and formulas for success.
PRAISE FOR THE LITTLE BOOK OF VALUATION
“There is nothing ‘little’ about Damodaran’s The Little Book of Valuation. The whole gamut of ideas that form the basis for all business valuations―covered in his many multi-hundred page classics―are all here, with the same rigor, clarity, pointedness, and wit.”
―PROFESSOR ANANT K. SUNDARAM, Tuck School of Business, Dartmouth College
“The Little Book of Valuation is a great book that I will recommend to my students and friends. This book is an impressive synthesis of sound theory and best practice. It is completely accessible to the novice. It is also an important addition to the professional library of the finance specialist. Acquire it without hesitation.”
―PABLO FERNÁNDEZ, Professor of Finance, IESE Business School, Spain
“Damodaran’s fast read book offers valuable insights for both institutional and sophisticated individual investors. Within the confines of ‘intrinsic’ (income approach) and ‘relative’ (market approach) analysis, he identifies the ‘value drivers’ in several broad categories of stocks and the most important factors to look for, and how to treat them in valuation for each category.”
―SHANNON PRATT, Chairman and CEO, Shannon Pratt Valuations
About the Author
Aswath Damodaran, is a professor of finance and David Margolis teaching fellow at the Stern School of Business at New York University. He teaches the corporate finance and equity valuation courses at NYU, and he offers online versions on his website. He has written books on valuation, corporate finance and investments, directed primarily at practitioners.
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