Module 3 of 5 in Practical stock research
Valuation and uncertainty in practice
Choosing a valuation method that fits the business, building scenarios from explicit assumptions, and comparing competing explanations.
3 lessons in this module. Progress is saved in your browser as you go.
This module turns valuation theory into judgement. You will choose methods that suit the business, write assumptions down so they can be challenged, and practise holding more than one explanation for the facts until the evidence decides between them.
By the end of this module you should be able to
- Choose valuation methods suited to a company's business model and stage.
- Build bear, base and bull scenarios with explicit, checkable assumptions.
- Compare competing explanations for a company's results and identify evidence that would separate them.
Lessons in order
Module test
10 questions, chosen at random from a bank of 30 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.
This module builds on
- Comparable-company valuation: Multiples-based valuation is one of the methods compared here.
- Discounted cash flow valuation: DCF is the main intrinsic valuation method compared here.
- Why sectors are valued differently: That lesson explains why different sectors are valued differently.
- Sensitivity and scenario analysis: That lesson introduces sensitivity tables and scenarios.
- Correlation and causation: Competing explanations are a practical application of separating correlation from causation.