Valuation models are tools used to estimate the worth of an asset, such as a company or a stock. These models help investors and analysts determine whether an asset is overvalued or undervalued based on various financial metrics and assumptions. Common valuation methods include the Discounted Cash Flow (DCF) model, which projects future cash flows and discounts them to present value, and the Price-to-Earnings (P/E) ratio, which compares a company's current share price to its earnings per share. Different valuation models can yield varying results, depending on the assumptions and inputs used. For instance, the Comparable Company Analysis method evaluates a company's value by comparing it to similar firms in the industry. Understanding these models is essential for making informed investment decisions and assessing the financial health of an asset.