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quantitative techniques. Analysts use the company's financial information, such as current
earnings and cashflows, assets, capital structure, and future cashflows, to determine the
company's current value.
The different share valuation method includes the dividend-based valuation, Zero-growth
model – This assumes that dividend will not change in the future and is used for valuing
preference shares. Next is constant-growth model – Most popular approach in dividend-based
share valuation which assumes that dividends will increase at a constant rate indefinitely but
always lower than the required rate of return. Finally, the variable growth model – This model
assumes that dividend may growth at varying rates and may go up or down depending on
business and economic conditions. In order to capture the variations in growth in the valuation,
these four steps should be considered.
The reason for stock valuation is to predict the future price or potential market prices for
the investors to time their sales or purchase of investments. The stock valuation fundamentals
aim to value the intrinsic value of the stock that shows the profitability of the business and its
future market value.