What is the stock valuation? What do you mean by underrated?

Stock valuation is a relatively complicated process, which is influenced by many factors and there is no global unified standard. There are many methods to evaluate stocks, and there are three commonly used methods according to different angles such as investors' expected returns, enterprise profitability or enterprise asset value.

There are generally three methods: the first price-earnings ratio method, which is the most common and universal method to determine the intrinsic value of stocks in the stock market. Usually, the average P/E ratio of the stock market is determined by the one-year bank deposit rate. For example, the current one-year bank deposit rate is 3.87%, and the corresponding average price-earnings ratio of the stock market is 25.83 times. The stock price with higher P/E ratio is higher than this. Generally speaking, the price-earnings ratio level

0- 13: the value is underestimated.

14-20: that is, the normal level.

2 1-28: The value is overvalued.

28+: Reflecting the existence of a speculative bubble in the stock market.

The second method, asset evaluation method, is to evaluate all assets of listed companies, deduct all liabilities of the company, and then divide by the total share capital to get the value of each share. If the market price of the stock is lower than this value, the value of the stock is undervalued; If the market price of a stock is greater than this value, the price of the stock is overvalued.

The third method is the sales income method, that is, the annual sales income of listed companies is divided by the total market value of listed companies. If it is greater than 1, the stock value is undervalued; If it is less than 1, the stock price is overvalued.