Relative valuation

Relative valuation is a way of judging whether a stock looks cheap or expensive by comparing its valuation ratios, such as P/E or EV to EBITDA, to those of similar companies, rather than trying to independently calculate what the business is intrinsically worth.

Relative valuation is generally faster and requires fewer assumptions than a full DCF model, but it has a built-in limitation, it only tells you how a stock is priced relative to its peer group, not whether the whole peer group is itself cheap or expensive.