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L.7 · BEGINNER · 2 MIN

Putting It Together: Is This Stock Cheap?

Professional investors never rely on a single metric. They look at P/E, EV/EBITDA, P/B, and DCF together to build a complete picture.

Quiz · 5 questions ↓

Live data

AAPL — P/E, EV/EBITDA, P/B. Open AAPL on the Ledge to see current values.

Compare

MetricBest ForWeakness
P/EQuick comparison, profitable companiesIgnores debt, manipulable via accounting
EV/EBITDAComparing across debt levels, M&AIgnores CapEx differences
P/BBanks, REITs, asset-heavy industriesUseless for asset-light tech
DCFIntrinsic value from fundamentalsHighly sensitive to assumptions

Key point

If most metrics say cheap but one says expensive, dig deeper. There might be a good reason. Maybe earnings are about to drop, or assets are overvalued on the books.

Try it

Pick any stock. Check P/E, EV/EBITDA, and P/B all at once in the **Key Metrics** section. Do they tell a consistent story?

Key insight

Valuation is not a formula. It is a judgment call informed by multiple signals. The numbers narrow the range; your analysis determines where within that range the true value lies.

Check-in

Stock X: P/E 25x, EV/EBITDA 15x, P/B 4x. Your DCF suggests 20% downside from current price. Peer group average: P/E 15x, EV/EBITDA 10x, P/B 2x. What's your conclusion?
Check your understanding

Sit with the ideas.

A stock has P/E of 12x (below sector median of 18x), EV/EBITDA of 7x (sector: 11x), and P/B of 0.9x. The DCF shows 40% upside. But the company has declining revenue for 3 consecutive years. What should you do?

Why:
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