At investment banks, how do you tell a company is over valued or undervalued? Based on p/e only or dcf? Because dcf results vary in a wide range, how is it accurate?

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You generally provide a range of valuation since there are nuances into each company and valuation is not an exact science.

Run multiple types of valuation DCF, public comps will likely be the most useful enforcement public companies. You wanna make sure the comps make sense and are tailored to the company you're evaluating.

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Anyone who knows anything, P/E is the last thing you would look at. There’s practically 0 comparable basis, plus no one cares about net income as a profitability measure. EV / EBIT/D/A/R/X etc. multiples are standard

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R: restructuring and X: extraordinary/NRIs?

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Def, comps, precedents, lbo to arrive at EV

subtract net debt to get to equity value

Divide by fully diluted shares outstanding

And arrive at a implied price per share

Put that puppy on a foot ball field and compare with current share price it’s trading at

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As far as I have worked in investment research you will always get varying answers based on the model you use, at the end of the day my supervisors and mentors told me to always see what the clients requirements are and to use my judgement to see which model I used is more relevant to the case. You have to run scenarios as well - every model has its own drawbacks. Also never hurts to scan through other analyst perspective but don't concentrate too much on it.

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I usually ask chat GPT, smart to upload client financials too

💀💀💀💀

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