Absolute Value

Absolute Value
A business valuation method that uses discounted cash flow analysis to determine a company's financial worth. The absolute value method differs from the relative value models that examine what a company is worth compared to its competitors. Absolute value models try to determine a company's intrinsic worth based on its projected cash flows.

In addition to looking at ratios such as price to earnings and price to book value, value investors like to calculate what an entire business is worth when they are considering whether to buy a particular stock. Discounted cash flow models are one way to determine this worth. They estimate a company’s future free cash flows, then discount that value to the present to determine an absolute value for the company. By comparing what a company's share price should be given its absolute value to the price the stock is actually trading it, investors can determine if a stock is currently under or overvalued.


Investment dictionary. . 2012.

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  • absolute value — value of a number expressed as a positive number (i.e. 23 has an absolute value of 23) …   English contemporary dictionary

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  • Absolute Value (album) — Infobox Album Name = Absolute Value Type = studio Artist = Akrobatik Released = February 19th, 2008 (U.S.) Genre = Hip Hop Length = 52:07 Label = Fat Beats Records Producer = 9th Wonder, Illmind, J Dilla, Da Beatminerz, Therapy, Hezekiah, J Zone …   Wikipedia

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