A stock price is determined through various methods. however, before a firm determines the method to use in valuing its stock, it is expedient to determine whether it is fit for that method. There are two basic methods of valuing a stock, that is absolute valuation and relative valuation. Under the absolute valuation, we have methods like the dividend discount model, the discounted cash flow model, and the residual income model. Under the relative valuation method, we have the comparative model which involves the use of financial metrics such as the P/E ratio among others are used.