The value of a company’s common stock that is calculated based on its earnings per share (EPS) and the price/earnings (P/E) multiple. The higher the EPS or P/E, the higher the stock value, and thus the company’s worth. The share price reflects investors’ expectations of future earnings, while the book value reflects the accounting value of historical earnings. The accounting value approach is often used by financial analysts in valuating stocks and publicly-held companies.
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