An overview of company valuation techniques and an application

The selection of appropriate valuation methods has been the matter in the literature over the last years and will probably continue to be for many years. Analysts have used different methods which are discounted cash flow, relative valuation, dividend discount model, economic value added, residual income and real options models throughout the literature.Even if all these models have advantages and disadvantages, analysts have admitted that the companies? specific properties influence which model to be used. Yet, they have concluded that the most appropriate model is the discounted cash flow model.The aim of this paper is to find out the market value of a company (Ereğli Demir Çelik) traded in Istanbul Stock Exchange (ISE) using the Discounted Cash flow valuation method (DCF). The results are then compared to the actual market price of the company in order to determine whether the company is trading at a premium, at a discount or at par. The analysis tool is the financial statements covering 2005-2009 period. It is found that, the Company is undervalued which means that it is traded at a discount.