how valuation analysis is used
the output of valuation analysis can take many forms it can be a single number such as a company having a valuation of approximately 5 billion or it could be a range of numbers if the value of an asset is largely dependent on a variable that often fluctuates such as a corporate bond with a high duration having a valuation range between par and 90 of par depending on the yield on the 30 year treasury bond valuation can be expressed as a price multiple for example as a tech stock is trading at a price to earnings p e multiple of 40x a telecom stock is valued at 6x enterprise value to earnings before interest taxes depreciation and amortization ev ebitda or a bank is trading at 1 3x price to book p b ratio valuation analysis can also take the final form of as asset value per share or net asset value nav per share valuation and intrinsic valuevaluation analysis is important for investors to estimate intrinsic values of company shares in order to make better informed investment decisions fair values of bonds do not deviate much if at all from intrinsic values but opportunities do arise once in a while in the case of financial stress of a heavily indebted company valuation analysis is a useful tool for comparing companies within the same sector or estimating a return on an investment over a given time period 