Relative Valuation Model In Excel

Relative Valuation Model In Excel

Ever wondered how to accurately evaluate a company's stock? Look no further! Our relative valuation model in Excel provides the solution. With our easy-to-use tool, you can swiftly compare a company's stock with that of similar companies, gaining accurate insights into the company's true value. No more complex calculations or lengthy research – we offer all the information you need within seconds! Utilize our relative valuation model in Excel today and have the latest stock price data at your fingertips!

What is a Relative Valuation Model, and Why Should You Use It?

A relative valuation model in Excel is a tool used to compare the stock prices of different companies. By comparing the current market price of a company's stocks with those of similar companies, investors can gain insights into the potential value of a particular stock, enabling them to make more informed investment decisions. It also helps investors identify potential arbitrage opportunities (buying and selling stock at different prices) and leverage any potential mispricing.

Unlike absolute valuation models, relative valuation models are not solely based on a company's fundamentals. They also consider the stock prices of comparable companies to get a more accurate indication of a specific company's stock value. Bearing this in mind, our relative valuation model in Excel is an indispensable tool for investors aiming to better understand their investments and identify investment opportunities more quickly.

Advantages of Using a Relative Valuation Model in Excel

  1. Fast and efficient – Quickly obtain data on comparable companies and perform calculations within moments, instead of spending hours researching.
  2. Accurate – Our model considers the stock prices of similar companies to provide an accurate indication of a company's stock price.
  3. Easy to use – Our tool is designed to be user-friendly and suitable for both novices and experienced investors.
  4. Cost-effective – You won't need to pay for expensive software or analytics packages to access the data you need.

So, if you're searching for a reliable and accurate tool for comparing stock prices, our relative valuation model in Excel is the perfect solution.

How to Calculate the Value of a Company Using a Relative Valuation Model

The relative valuation model in Excel employs various metrics to determine a company's stock value. It considers the company's fundamentals, such as revenue, earnings per share, cash flow, and EBITDA.

Find an Appropriate List of Companies to Compare

For the relative valuation model to be effective, you must find a list of companies that are similar in terms of sector, industry, and size. This will allow you to compare different ratios and metrics, helping you identify investment opportunities.

You can do this effectively by searching for lists of companies within a particular sector or industry. For example, search for "semiconductor stock list".

Find an Appropriate List of Companies to Compare

With the list of stocks in your spreadsheet, you are ready to get the necessary data to compare the stocks and perform the relative valuation.

Decide What Valuation Metrics You'd Like to Compare

Typically, when performing relative valuation, you will consider the following metrics:

  • Price-to-Earnings (P/E) Ratio
  • Price-to-Sales Ratio
  • Price-to-Operating Cash Flow
  • Price-to-Free Cash Flow Ratio
  • Price-to-Book Ratio
  • Price-to-Tangible Book Ratio
  • Enterprise Value-to-Sales
  • Enterprise Value Over EBITDA
  • Enterprise Value-to-Operating Cash Flow
  • Enterprise-to-Free Cash Flow

However, you can also use other metrics or create your own based on fundamental and price data. Once you've decided on the metrics to compare, simply add them to your spreadsheet alongside your list of stocks.

Decide What Valuation Metrics You'd Like to Compare

Gather the Necessary Data for the Relative Valuation

The data you will need for your list of stocks will depend on the valuation metrics you'd like to compare. For instance, to calculate the P/E ratio, you need to find a company's stock price and earnings per share. This can be done for the previous year, the last quarter, or the trailing twelve months (TTM) – it's really up to your preference.

Gather the Necessary Data for the Relative Valuation

Gathering this information manually can be time-consuming and inefficient, especially as information like stock prices changes constantly. For this reason, we recommend using the relative valuation model in Excel, which automates this process.

Calculate the Mean and Median Valuation Multiples

With your stock list and required data, the heavy lifting is almost done. All you need to do now is calculate the mean (average) and median multiples that you would like to apply to the stock of your choice. You can use the =AVERAGE() and =MEDIAN() spreadsheet formulas for these calculations.

Calculate the Mean and Median Valuation Multiples

Perform Your Relative Valuation

Using these calculated metrics, you can assess any stock to determine whether it's undervalued or overvalued. For instance, for a list of semiconductor stocks with a mean price-to-sales ratio of x, you can apply x to the number of sales for a particular stock to see the implied valuation.

Relative Valuation Model In Excel

You can then compare the implied value with the actual current market cap of the company. If the company's implied value is lower than the current market capitalization, the company may be overvalued.

Perform Critical Analysis

After comparing the implied value to the company's current value, it's crucial to consider whether the implied value is fair based on the company you're analyzing. For example, applying the same multiple to a smaller, riskier company as you would to an established one may not be advisable. However, if a company of superior quality appears undervalued compared to your stock list, this could be a great investment opportunity.

Steps to Create a Relative Valuation Model in Excel

Creating a relative valuation model in Excel follows the steps described above, but the key difference is that much of the process is automated, allowing you to compare hundreds of companies at once.

Find an Appropriate List of Companies to Compare

Follow the same steps as described above.

Decide What Valuation Metrics You'd Like to Compare

You can check out all the valuation and non-valuation metrics you can automatically get by using our method here.

After deciding on the metrics to compare, just add them to your spreadsheet, along with the period you'd like to get data for, e.g., LY (last fiscal year), LQ (latest fiscal quarter), and TTM (trailing twelve months). If you don't specify a period LY is the default.

Decide What Valuation Metrics You'd Like to Compare

Use the Wisesheets Screener to Get All the Data at Once

Simply select the list of companies and the parameters you want in the appropriate fields. Then, click on "Get Data".

This will return all the data at once and create a bucket with the list of tickers and parameters you have entered. You can always refresh it by clicking the "Refresh" button on your created bucket.

Afterward, you can apply the same steps, as shown above, to complete your relative valuation model and enjoy the final product.

Click here to create a Wisesheets account and get the add-on for Excel or Google Sheets.

Tips for Optimizing Your Relative Valuation Model

  1. Use the Right Metrics for Your Industry Each industry requires certain metrics to create a comprehensive relative valuation model. Consider the sectors and industries when creating your stock list for comparison.
  2. Refresh Your Data Regularly Stock prices, earnings per share, sales, and other operational data change often, so make sure you refresh your data regularly for the most accurate results.
  3. Consider Other Factors When Analyzing Data Always take into account qualitative and quantitative variables such as risk, management quality, and potential catalysts when performing your analysis.


Relative valuation is an excellent method for comparing different stocks to identify investment opportunities. By following the steps described above, you can create a relative valuation model in Excel and streamline the process of analyzing stocks. Remember to always consider other qualitative and quantitative factors when making an investment decision.

Happy investing!

Hello! I'm a finance enthusiast who fell in love with the world of finance at 15, devouring Warren Buffet's books and streaming Berkshire Hathaway meetings like a true fan.

I started my career in the industry at one of Canada's largest REITs, where I honed my skills analyzing and facilitating over a billion dollars in commercial real estate deals.

My passion led me to the stock market, but I quickly found myself spending more time gathering data than analyzing companies.

That's when my team and I created Wisesheets, a tool designed to automate the stock data gathering process, with the ultimate goal of helping anyone quickly find good investment opportunities.

Today, I juggle improving Wisesheets and tending to my stock portfolio, which I like to think of as a garden of assets and dividends. My journey from a finance-loving teenager to a tech entrepreneur has been a thrilling ride, full of surprises and lessons.

I'm excited for what's next and look forward to sharing my passion for finance and investing with others!

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