Assessing Relative Valuation in Equity Markets

This
book addresses the gap between the widespread use of stock market multiples in
valuation practice and the frontiers of research on multiples. The book's approach
is twofold: the authors first analyse the performance of multiples metrics in
predicting the market price of a set of liquid and highly traded US stocks. The
authors then employ these results to test profitable stock purchasing
strategies employed in order to 'beat the market'. The results presented widen
our understanding of the “market performances” of the valuation tools practitioners
utilise in their everyday work. The evidence is of interest to researchers
 and equity analysts, who wish to analyse the circumstances in which
valuation errors using multiples are more frequent and when market multiples
become ineffective in estimating market prices.