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Determination of the value of a company's stock based on earnings and the market value of assets.


The process of determining how much an asset, company, or anything else is worth. Valuation is highly subjective, but it is easiest when one is considering the current value of tangible assets. For example, determining how much a willing buyer will pay a willing seller for a house right now is easier than determining the value of what a company's brand recognition might be in 10 years. Valuation is important in fundamental analysis, the practitioners of which usually consider a company's earnings to be indicative of its value.


A process for calculating the monetary value of an asset. Valuation is subjective and results in wide disparities for the values of most assets.


Valuation is the process of estimating the value, or worth, of an asset or investment.

Sometimes it means determining a fixed amount, such as establishing the value of your estate after your death. Other times, valuation means estimating future worth.

For example, fundamental stock analysts estimate the outlook for a company's stock by looking at data such as the stock's price-to-earnings (P/E), price-to-sales, and price-to-book (net asset value) ratios.

In general, a company with a high P/E is considered overvalued, and a company with a low P/E is considered undervalued.


(1) The process of estimating the worth of something. (2) The estimated worth given to something.

References in periodicals archive ?
WaveRider also announced today it will be making additional material inventory write-downs, resulting from the NCL product line transition, and will be recording significant non-cash charges related to the accounting valuation of the warrants and other features included in its recently announced financing.
The accounting error resulted from an incorrect input into an inventory accounting valuation program implemented earlier in the year.
Our second quarter results include a significant loss from the CD ROM business as well as a thorough accounting valuation of the related assets and liabilities," stated Michael W.
The proceeds from this transaction slightly exceeded the value established during the purchase accounting valuation process.

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