The multiples that count
Valuation blends trailing and forward price-to-earnings, EV/EBITDA, price-to-sales, price-to-book, PEG, free-cash-flow yield and earnings yield.
Using several multiples at once protects you from the quirks of any single one. Price-to-book is meaningless for an asset-light company; EV/EBITDA is far more forgiving of debt than it should be.
Cheap is not the same as good
A high valuation score means the company is inexpensive on the figures — nothing more. Pair it with the Quality dimension before drawing any conclusion; the cheapest companies are often cheap for reasons the numbers already show.