Stock Valuation (How to value stock) is a much-debated topic and there are two divergent views. One school of thought does look for valuation at all and is fully focused on the quality of business. Another school of thought wouldn’t buy overvalued stocks even though the quality of business is great. In my view, valuation should be the last matrix to consider like the quality of business, management is most important. However, some format of right valuation method can help you buy great businesses at favorable prices. However, cheap valuation is not a substitute for business quality. Many analysts and companies preach about using ONE valuation method for all kinds of companies. However, that doesn’t seem right. The company’s stage of growth is very important to price business properly. A company in the early stages or a huge growth curve e.g. Sea ltd cant be valued the same way Apple would be valued. Some of the most commonly used valuation matrices are the P/E ratio, PEG, EV/EBITDA, Price/Sales, and discount cash flow methods. However, as per genius investors, Warren Buffett and Charlie Munger, business ability to generate cash is most critical, and hence discounted cash flow works best. PEG ratio was made popular by Peter Lynch . for an exact definition of these measures, please follow https://www.investopedia.com/financial-term-dictionary-4769738 If discounted cash flow method may be a great starting point for stock valuation for matured businesses…it may not be appropriate for a fast-growing business. Price to sales (P/S ratio )is the better way to go. Also , many investors use the P/E ratio as a benchmark and I have given examples of Amazon (Amzn), Tesla (Tsla), Sea ltd (SE) and Intel (INTC) to show that this is a misleading measure and cant help you create mega gains So, in nutshell, for established businesses, discounted cash flow can be a good starting point and for fast-growing businesses, price to sales would be a good starting point. However, these need to be triangulated with business and management quality. Again, valuation is the last thing to look at. it can never be a substitute for business quality.