Wanted to get WSO's opinion on which valuation book (Rosenbaums, Damodaran, McKinsey, TTS etc.) is the best from a practical perspective.
Basically, I'd like to work on my knowledge of corporate valuation/finance to apply in a value investing way, so definitely looking for something that would give me the knowledge but also allow me to apply it.
Considering there is no "best" method for valuation (value is only what someone is willing to pay, right?) - you could probably use the internet for most. Macabus, Udemy should have some good resources at good prices, etc. I liked Buffettology for spare-time reading when I was in college. It's not going to drill into technical aspects of DCFs, etc., but the general framework was very helpful to someone in the beginning stages of their finance studies.
You're describing price.
McKinsey and Damodaran are plenty good to go through more than what you'll need. The trick is understanding it all in a more in-depth matter than just plugging numbers.
If I had to pick one it would be McKinsey's Valuation. It's a bit theoretical in spots, but the section on reorganizing financial statements and understanding ROIC is very practical. Damodaran is too theoretical in my opinion, and Rosenbaum is only good to understand how bankers think about valuation.
Other good books with more of a value-investing focus would be Value Investing (Greenwald), Margin of Safety (Klarman), and Accounting for Value (Penman).
Also double recommend Accounting for Value by Penman - you'll get to see a rather different view from what you're used to. Albeit his approach also has some small gaps, but a really awesome book for the distressed / value (or similar) guys.
+1 helpful and love the user name
McKinsey is going to be your best bet. It does the best job in teaching the reader how to value firms and determining what drives value.
check out Damodaran's website for free content
Common stocks and common sense by Edgar Wachenheim.
Any idiot can learn to model. Learning how to apply the simple drivers effectively is part many struggle with. This book is very good at giving examples.
I would second the recommendations for Damodaran. The online course is definitely more worthwhile than the book (would recommend doing the lectures on iTunes U and then just pinch the associated coursework that it doesn't have one the website).
Definitely agree with the Damodaran people. The free lecture webcasts are a good start and you may as well buy the little book of valuation while you're at it. I would also add "The Tao Jones Averages" to the list...It's hardly a technical book but it teaches you how to think clearly and be creative when thinking about valuation/investing.
It comes down to two books: Pratt's The Cost of Capital and the McKinsey book. The two are very different. The McKinsey book is more to the point. It explains a concept, shows you how to apply the concept and then provides numerous examples. It's a very practical book, aimed more towards the professional (why it's used in so many MBA programs). Pratt's book is more conceptual. It's an academic look at the science, grounded in theory and empiricism. It explores the varying methods and positions on major valuation topics and takes a stance on each of them.
You really can't go wrong with either of them. You should probably read both.
I'm a lover of Value Investing and my favorite book on valuation from a value perspective is Value Investing: From Graham to Buffett and Beyond by Greenwald.
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