The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit
- Downloads：1737
- Type：Epub+TxT+PDF+Mobi
- Create Date：2021-06-03 08:55:28
- Update Date：2025-09-14
- Status：finish
- Author：Aswath Damodaran
- ISBN：1118004779
- Environment：PC/Android/iPhone/iPad/Kindle
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Reviews
Khaled Alsayed
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As a beginner it literally felt like I was reading a book in a language I don’t speak。 I gave up after reading the first three chapters as I just couldn’t understand anything。 I’ve been learning stuff from YouTube and I already read 1 book on investing（ 7 secrets to investing like warren buffet） So it’s not like I have 0 knowledge on investing in the stock market。 I feel like this book was way to complicated for me and I’ll probably give it another shot after reading a few books and maybe it’ll As a beginner it literally felt like I was reading a book in a language I don’t speak。 I gave up after reading the first three chapters as I just couldn’t understand anything。 I’ve been learning stuff from YouTube and I already read 1 book on investing（ 7 secrets to investing like warren buffet） So it’s not like I have 0 knowledge on investing in the stock market。 I feel like this book was way to complicated for me and I’ll probably give it another shot after reading a few books and maybe it’ll be easier to understand then。 Beginners stay away！ 。。。more
Morten Hovland
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This review has been hidden because it contains spoilers。 To view it， click here。 Good book！ A bit heavier to read then the other "little books"。 Requires more insight to valuation to deeply understand it。MY key takeaways: -Valuing a company- Equity， cash flow， profits， dividend， debt， P/E， beta etc。。。-Time， risk， free cash flow analysis， fair value， stagnant/reducing or growin profits- Valuing intangible and tangible assets-Valuing cyclical companies- "The median earnings"10 rules for the road1。Feel free to abondon models2。 Pay heed to markets3。 Risk affects value4。 Growth i Good book！ A bit heavier to read then the other "little books"。 Requires more insight to valuation to deeply understand it。MY key takeaways: -Valuing a company- Equity， cash flow， profits， dividend， debt， P/E， beta etc。。。-Time， risk， free cash flow analysis， fair value， stagnant/reducing or growin profits- Valuing intangible and tangible assets-Valuing cyclical companies- "The median earnings"10 rules for the road1。Feel free to abondon models2。 Pay heed to markets3。 Risk affects value4。 Growth is not always good5。 Nothing last forvever， even value6。Watch out for truncation risk7。 Look at the past， but think at the future8。 Remember the law of large numbers9。 Accept uncertainty10。 Convert stories to numbers 。。。more
Saurabh Hooda
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Didn't help me in learning how to value a company。 Didn't help me in learning how to value a company。 。。。more
Mel
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This little book packs a punch。 For those looking for a crash course on industry-based company valuations — not for the faint-hearted。
Gustavo Avalos
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O mais completo e simples livro de valuarion。 Simples significa linguagem acessível e completo porqhe cobre várias situações de empresas distintas。
Rohit
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financial statement interpretation & analysis experience can help readers appreciate this book。
Adhiraj Jain
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I read this book at a really interesting time。 In a market that has supposedly forgotten the word ‘valuations’， I think this book is a good read as a reminder for investors like me in a market where it seems that the majority of the crowd has come to a consensus that ‘valuations don’t matter。 So， here is a refreshing little book on the art of valuation。 Aswath Damodaran has written this book with utmost simplicity such that it's extremely easy to understand。Valuations can be a tricky area for in I read this book at a really interesting time。 In a market that has supposedly forgotten the word ‘valuations’， I think this book is a good read as a reminder for investors like me in a market where it seems that the majority of the crowd has come to a consensus that ‘valuations don’t matter。 So， here is a refreshing little book on the art of valuation。 Aswath Damodaran has written this book with utmost simplicity such that it's extremely easy to understand。Valuations can be a tricky area for investors。 Rarely do investors come to a consensus regarding the valuation of a stock。 And that is what makes the market。 Different perspectives and expectations often fuel different narratives regarding a business or a stock。 So， Valuations are often estimations that often change with time as the future is many times uncertain and unpredictable。 Valuations are also extremely prone to incentives and biases。 One thing I have learned about valuations over the years is that investors can easily manufacture any well-sounding explanation to justify whether low or extremely high valuations。 My two most important insights from this book are: 1。tThe most important factors in the valuation of a firm are its ability to generate cash flows in the future and the uncertainty regarding those cash flows。 Firms with the ability to generate higher cash flows in the future will be valued more highly， as is the nature of the market to value growth companies at higher multiples。The firms can be intrinsically or relatively。The most common method to assess the intrinsic value of an asset is Discounted Cash flow （DCF） analysis where the sum of all cash flows in the lifetime of the company are estimated and summed up and discounted back to the present day。 Relative valuations are influenced by the way similar assets are priced。 So， this book briefly explains how the cost of capital， growth rates， and cash flows can be estimated to calculate the intrinsic value of a firm。 And all these calculations are subject to assumptions。 So， they are great tools to use but one should be aware of their shortcomings and limitations。2。tThe second takeaway from the book is that one should not use the same hammer to value different types of companies。 This is a very common error most investors make。 This book analyses companies in different sectors and different stages of their lifecycle。 It’s probably not wise to value a loss-making company that is yet to exploit its market potential the same way one would analyze a multi-billion-dollar giant。 There is no one size that fits all。 So， growth companies should be subject to different valuation metrics than mature and stable firms。 As Charlie Munger states， ‘there should be different checklists for different type of companies。Similarly， it's also not wise to compare the valuations of companies in different industries with similar valuation metrics。 For example， A financial services company is exposed to more risk than an IT/Internet company。 Banks can blow upon an entire century of profits in a quarter due to bad lending practices which are difficult to replicate in most other types of businesses。 All Businesses are exposed to their own unique industry-specific risk， thus they should be valued accordingly。 And this is what makes investing extremely exciting as every investment opportunity can be viewed from multiple perspectives。 This book wonderfully gives a brief overview and some good perspectives over different ways to view a cyclical， growth， mature， declining， loss-making， leveraged， and commodity firms。I could have written a lot more， but the book has done a good job of explaining most concepts。As it can be made out from the title， this is a little book that doesn’t take much of your time。 It is a great crash course for someone who wants to understand the art of valuations and factors that influence valuations。 But everything written should probably be not taken too literally as investing and the business world is far more uncertain than most people imagine and the points stated are just good perspectives to have at your disposal。 。。。more
rd
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nice and short， straight to the point with relevant examples。 wish it were updated to post 2010 markets。 wish it was more thorough on some sections， but then again， it would cease to be "the little book" then。 nice and short， straight to the point with relevant examples。 wish it were updated to post 2010 markets。 wish it was more thorough on some sections， but then again， it would cease to be "the little book" then。 。。。more
Kevin Wu
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Ngl I’m pretty stoked on Aswath Damodaran。 Pretty good book， but I’ll hark what other reviews say: it’s technical， a little rough， but a great crash course into valuation。 Shout out to Papa Werling for the recommendation。
Adam Tenasaputra
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This review has been hidden because it contains spoilers。 To view it， click here。 Good for those that are unfamiliar with finance。 A broad review to those that done graduate level work。 It’s a combination of elementary statistics and bare basic finance。 Only good chapter might be invisible value（ation）
Lucas Meneghetti
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There is no doubt that Damodaran is one of the best valuation experts。 The book brings a efficient generalist approach on the concepts and methods used for valuation but， given the size of the book， it fails to delve into these methods。 A good book for those who wants to understand the core of valuation。
Martin Helgeby
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I see a few reviews commenting on level of difficulty in reading this book so I’ll add my $0。02。 For whom is it suitable？I personally read this book to serve as both a refresher and primer in the subject: having taken various bachelor’s level courses in finance some 10 years ago as part of my degree， without having spent any of my subsequent professional life working specifically in valuation; and preparing to read the subject as part of an MBA this autumn。 For others with a similar background o I see a few reviews commenting on level of difficulty in reading this book so I’ll add my $0。02。 For whom is it suitable？I personally read this book to serve as both a refresher and primer in the subject: having taken various bachelor’s level courses in finance some 10 years ago as part of my degree， without having spent any of my subsequent professional life working specifically in valuation; and preparing to read the subject as part of an MBA this autumn。 For others with a similar background or motivation this book could serve as a gentle refresher/primer， cheap and cheerful， almost tabloid in its presentation （I mean that in the best way）！I imagine the same might also be the case for hobby investors who regularly read finance blogs/material without necessarily having the educational or professional background， and/or others who have at least some knowledge of financial concepts。 However， for someone looking for a very first introduction， I’d perhaps recommend starting with the basics （some theory on financial accounting， metrics/ratios， and general mathematical knowledge i。e。 how and why one discounts the time value of future cash flows） in order to better benefit from reading this book later on。 I’d absolutely recommend this to others in the financial industry looking for a quick reference or to catch up with the subject of valuation。 。。。more
Joseph D Foresi
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This will be the quickest read on valuation you have ever done and the most productive。 Best bag for you buck。 Enjoy intrinsic or relative valuation goer’s。
Puru Gupta
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An interesting summary of different ways to look at various types of companies。 Contrary to some of the reviews on Amazon， this book actually adds perspectives to how to value firms。
Jiliac
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What an awesome book！ Hypothesis: you are already a convinced "value investor"。 Damodaran argues a little in favor of this approach， but not much。 This book is not an introduction to the subject。 Graham， "The Intelligent Investor"， would be a better starting point。 The *goal* of this book: give you all the tool to determine a value for any good。 While Damodaran pays lip service to relative valuation， the book really is about Discounted Cash Flow valuation （DCF）。 The books teaches you how to set What an awesome book！ Hypothesis: you are already a convinced "value investor"。 Damodaran argues a little in favor of this approach， but not much。 This book is not an introduction to the subject。 Graham， "The Intelligent Investor"， would be a better starting point。 The *goal* of this book: give you all the tool to determine a value for any good。 While Damodaran pays lip service to relative valuation， the book really is about Discounted Cash Flow valuation （DCF）。 The books teaches you how to set the three core inputs of DCF: *cash flow， growth and risk*。This is a technical book。 The math are not advanced， just middle school level， but you have to be willing to spend the time reading annual/quaterly reports， understand the company and do all the adjustment needed in different cases。 If you are not willing to take the time it takes to do proper valuation， just go the safe way and invests in ETFs/index。 In his book， Graham warns multiple times against this。 There is no "intermediary": either you go the very simple route， 5min per month， or you invest a significant amount of time， like 15h per week。 （Not even sure 15h is enough）。 It takes a while。If you want to get into valuation， and you are willing to take the time to do it， then this book is for you！ I found it so perfect。 Knowing close to nothing at the start， it provided all I needed to learn how to value stocks。 I recommend also looking at all the content Damodaran is providing on his website。 He gives so many concrete examples。 The book is structured in three parts。 First， accounting and valuation fundamental tools。 Then in the second part， look at the four stages of growth of companies。 In the final part， it deals with special kind of companies: financials， cyclical， and the ones with many intangibles。 Probably， most returns are made with this kind of companies。 。。。more
James Ford
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This book really only covers the very basics of valuation and does so in a bit more of a technical way， not sure who the intended audience would be。 I was disappointed mainly because I am a big fan of Damodaran's and very much enjoy his other writings， especially his blog posts。 Did not take away much from this book unfortunately。Notes:1 - "companion variables": key variable that dominates when it comes to explaining each multiple。2 - intangible assets are often expensed rather than capitalized。 This book really only covers the very basics of valuation and does so in a bit more of a technical way， not sure who the intended audience would be。 I was disappointed mainly because I am a big fan of Damodaran's and very much enjoy his other writings， especially his blog posts。 Did not take away much from this book unfortunately。Notes:1 - "companion variables": key variable that dominates when it comes to explaining each multiple。2 - intangible assets are often expensed rather than capitalized。3 - proper ESOP impact on PE value lies roughly half way between undiluted and fully diluted PE （options should to be valued separately using BSM or using market value）。4 - firms with intangible assets tend to be big users of equity options as compensation which will affect equity value per share。 。。。more
Bozhidar
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An approachable and short introduction to the complex subject of valuations。 Nothing more， nothing less。 While some formulas might be a bit intimidating you don't really need to know much about mathematics or finance to benefit from this book。 For me the most useful topics in the book were the different valuation models for the different types of businesses - e。g。 young， growth and mature companies， financials， cyclicals/commodity producers， etc。 An approachable and short introduction to the complex subject of valuations。 Nothing more， nothing less。 While some formulas might be a bit intimidating you don't really need to know much about mathematics or finance to benefit from this book。 For me the most useful topics in the book were the different valuation models for the different types of businesses - e。g。 young， growth and mature companies， financials， cyclicals/commodity producers， etc。 。。。more
Sun AFreeKaBa
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If you're looking to earn a PhD in investing this is a great read。 I don't do complex when it comes to investing， I do simple。。。 If you're looking to earn a PhD in investing this is a great read。 I don't do complex when it comes to investing， I do simple。。。 。。。more
Francisco
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This book has a lot of insight in general company valuation。 It's more intrinsic valuation biased and it's best practised than read as it contains a reasonable amount of numbers and calculations。 Good for intermediary investors and not beginners。 This book has a lot of insight in general company valuation。 It's more intrinsic valuation biased and it's best practised than read as it contains a reasonable amount of numbers and calculations。 Good for intermediary investors and not beginners。 。。。more
Helfren Filex
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The book of valuation is one of the most curious book on market that I ever read。 Since I faced a falling market， I have no idea on how to proceed on transaction in my market。 However this book offer hope on how to determine using simple forecasts，as simple as possible with a few years forecast。 A very interesting prospect on how to tackle the market decline or incline。
David Blynov
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A brief guide to which factors must be accounted for when making a value judgement in order to know whether or not a company stock is worth buying。 Talks about intrinsic vs relative valuing in different contexts。3。9/5， wish I understood more than I did
Sandip Bhattacharya
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Not for noviceThis is not for beginners。 Novice in stock market should not try to understand valuation from this book。 People with basic knowledge of financial valuation can buy it。
Leon
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This book highlights the importance of distinguishing between different companies from a fundamental perspective。 It gives the reader a better perspective on how to value young growth companies， mature companies， declining companies， financial companies， commodity and cyclical companies， etc。 Each category is well explained it terms of identifying the issues with its valuation， providing the solutions and at the end of every chapter it is summarised quite nicely。 Personally the book had a good m This book highlights the importance of distinguishing between different companies from a fundamental perspective。 It gives the reader a better perspective on how to value young growth companies， mature companies， declining companies， financial companies， commodity and cyclical companies， etc。 Each category is well explained it terms of identifying the issues with its valuation， providing the solutions and at the end of every chapter it is summarised quite nicely。 Personally the book had a good mix of information just enough to give it a comprehensive view on valuation but at the same time not being overly densed。 An excellent book on the fundamentals of valuation and it certainly helps in fundamental analysis。 。。。more
Leandro Melendez
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Una lectura medio rapida pero que no podria considerar puramente como lectura。。。 Pues en realidad trae muchas formulas y tips de valuacion en los diferentes tipos de compañias y metodos de calculo。Cubre casi todo aunque en realidad me confundio un poco en algunas secciones。 Definitivo no es un libro de una sola lectura sino de consulta， hacer ejercicios， mucha practica y muchos ejercicios。Lo marco como terminado pero creo que lo voy a desgastar en consulta y re consulta。No es el mejor libro para Una lectura medio rapida pero que no podria considerar puramente como lectura。。。 Pues en realidad trae muchas formulas y tips de valuacion en los diferentes tipos de compañias y metodos de calculo。Cubre casi todo aunque en realidad me confundio un poco en algunas secciones。 Definitivo no es un libro de una sola lectura sino de consulta， hacer ejercicios， mucha practica y muchos ejercicios。Lo marco como terminado pero creo que lo voy a desgastar en consulta y re consulta。No es el mejor libro para enseñar valuaciones definitivamente pues requiere mucho conocimiento previo。Aun asi lo recomiendo infinitamente a los apasionados de la inversion。 。。。more
brother_rebus
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Great quick book for gaining unique insights on dual valuation methods。 After reading， plan to use as a reference book for replacing given examples with your looks & picks。
Matthew Olivier
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A good framework and starting place for company valuation。
Hassan Zakeri
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A terrific marriage of academic reasoning and market floor intuition。
Luke Durbin
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For such a small book， this certainly packs a punch。 The valuation principles outlined by Damodaran are sound and succinctly expressed。 While I acknowledge that this is intended to be a short read covering the essentials， I would have awarded an additional star if the examples were a little more fleshed out。 That said， Damodaran is the top of his field in valuation and corporate finance and he does provide in an depth companion to the book on his website damodaran。com。 I have gone down the rabbi For such a small book， this certainly packs a punch。 The valuation principles outlined by Damodaran are sound and succinctly expressed。 While I acknowledge that this is intended to be a short read covering the essentials， I would have awarded an additional star if the examples were a little more fleshed out。 That said， Damodaran is the top of his field in valuation and corporate finance and he does provide in an depth companion to the book on his website damodaran。com。 I have gone down the rabbit hole here and to the professor I am very grateful。 I recommend this book for private and professional investors， and anyone wishing to increase their understanding of equity valuation。 。。。more
Abhishek Mishra
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A nice and handy book to explore valuation options for various category of companies！
Vikash Anand
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