<p>The <strong>Market Approach</strong> is a fundamental analysis method that values a company by comparing it to similar public companies, known as <strong>comps</strong>.</p>

<h2>How It Works</h2>
<p>The Market Approach uses three primary valuation methods:</p>
<ul>
  <li><strong>Relative Valuation:</strong> Compares the company's valuation multiples (like P/E, EV/EBITDA) to those of its comps.</li>
  <li><strong>Precedent Transactions:</strong> Analyzes mergers and acquisitions involving comps to estimate the company's value.</li>
  <li><strong>Public Market Comparables:</strong> Uses the company's stock price and other market data to calculate its value.</li>
</ul>

<h2>Why It Matters</h2>
<p>The Market Approach is crucial for investors as it provides a quick and easy way to compare companies and identify undervalued or overvalued stocks. For instance, if a company's P/E ratio is significantly lower than its comps, it might be undervalued, presenting an attractive investment opportunity.</p>