Damodaran Videos on Relative Valuation, P/E Ratios, and Other Earnings Multiples

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Summary of Damodaran Videos
Relative Valuation
The relative value of an item is determined by comparing it to a group of similar assets known as a "peer group." If you were trying to sell your property, you would most likely research the projected prices of similar surrounding properties in the same community. Assets such as publicly traded company shares can be appraised similarly. The intrinsic value of an asset, on the other hand, is a measure of its worth. An objective calculation or a complex financial model determines this statistic. An asset's intrinsic worth differs from its current market price. Comparing it to the current price, on the other hand, may assist investors in determining if the item is underpriced or overvalued.
It is cheaper to sell a product using relative valuation than intrinsic valuation. Using the relative valuation, a seller only needs to highlight that the product is cheaper or better than other products. It isn't easy to defend intrinsic valuation because the assumption is all explicit, while assumptions in relative valuation are implicit because the facts are not easy to see apart. Relative valuation requires the use of multiples. The multiples are standardized estimates of price. The multiples are ratios that show how much you are paying for an asset and what you are getting in return.
P/E Ratios
The price-to-earnings ratio is a pricing statistic that compares a company's current stock price to its earnings per share (EPS). P/E ratios can be computed in one of two w...