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What some common valuation models used by Wall Street show:FED MODEL
Calculates an "earnings yield" by dividing expected company earnings by the S&P 500 index and comparing that to the yield of 10-year Treasury notes.Market is 13% undervaluedDIVIDEND-DISCOUNT MODEL
More elaborate version of the Fed model. Analysts create proprietary formulas and plug in multiple factors, including their estimates of gross domestic product and earnings growth.Market is 15% undervaluedPRICE-TO-BOOK
Compares total market value of companies with the net worth reported on their balance sheets.Market is 30% to 40% overvaluedP-E RATIO
Divides stock prices by reported or forecast earnings. Resulting number implies how many years investors must wait before the company earns what they paid for its stockMarket is 25% overvalued, based on an average p-e of 15 over the past 70 years
Data: BusinessWeek, Standard & Poor's Corp., Smithers & Co., Yardeni.com