The Little Book of Valuation

Reviewed by Diario de un Inversor · UpdatedJune 13, 2026

Our review

Aswath Damodaran is the world's most followed finance professor on business valuation — his NYU Stern courses and public spreadsheets are reference resources for professional analysts and individual investors alike. «The Little Book of Valuation» is his deliberate attempt to distil a complex discipline into an accessible volume without sacrificing rigor. The book covers the three main valuation approaches — discounted cash flows, comparable multiples, and asset-based valuation — and explains when and why to use each. Damodaran's merit is that he does not present valuation as an exact science: he introduces it as an estimation process with margins of uncertainty, where good judgment matters as much as the model. The chapters on the most common valuation errors — double-counting growth, ignoring the cost of capital, confusing price with value — are the most valuable in the book. The limitation is that the «little» version necessarily sacrifices depth: for professional application, Damodaran's reference work remains «Damodaran on Valuation». Published in 2011.

Key takeaways

• A company's intrinsic value is calculated by discounting future cash flows at the appropriate cost of capital, not by observing market price.
• Comparable multiples are only valid when the comparison companies have genuinely similar risk and growth characteristics.
• Valuation is estimation, not prediction: the goal is a reasonable value range, not an exact number.
• Growth without returns on capital above the cost of capital destroys value even as it increases revenues.

Fact

Aswath Damodaran is a professor of finance at NYU's Stern School of Business and publishes annual sector valuation spreadsheets covering thousands of publicly traded companies worldwide. The book was published in 2011.