Earnings Valuation Models These are measurements of the total "value" of a publicly-traded corporation Investors need a way to judge how much a company's stock is worth. To evaluate this, analysts have come up with various earnings valuation models Earnings are net profits, i.e. What's left over after expenses.
Investors often want to know the earnings per share (EPS). They also want to calculate the price/earnings (P/E) ratio, i.e. The stock price divided by the earnings.
This is the most common earnings valuation model.
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