👉 Investors use a combination of financial metrics and valuation methods to determine the worth of an investment opportunity. They often rely on metrics like Price-to-Earnings (P/E) ratios, Price-to-Book (P/B) ratios, and Discounted Cash Flow (DCF) analysis to estimate a company's intrinsic value. Additionally, they consider growth potential, market trends, and competitive positioning. Investors also apply valuation multiples derived from comparable companies or industry benchmarks to assess if a target company is overvalued or undervalued. By comparing these metrics and assumptions with the current market price, investors can gauge whether an investment is likely to yield a satisfactory return on their capital.
