How to value a stock?

• Hunter approach's stock picking can’t just rely on safety in numbers and buying baskets of ‘cheap’ stocks. Have to get to the bottom to check is it really worthy? It is pretty tricky thing to do. -- There are plenty ways to get a good enough approximination to buy with the confidence (you have a margin of safety).
• Relative Valuation - compring any of the ratios against its peer group
• "The Market can stay irrational for longer than you can stay solvent" -
  John Maynard Keynes. - If you don’t ‘play the game’ when markets are theoretically over-valued you can miss some of the greatest years in the stock market.
• Low P/E, High EY - the benefits of these approach are that you are always in the market so you won’t miss the best years but the drawbacks are several.
• Absolute Valuation - calculate intrinsic value. Value investor like to do this instead of relying on what other people pay for something as barometer of value (it can lead to very nasty outcome). 
1. Asset - figure out how much they would be worth either in a sale or if they have replaced. (If you are buying a bargain bucket stock at risk of bankruptcy or an oil stock with no earnings)
2. Projected Cash Flow - how much you’d be willing to pay for the right to own them as an income stream.  (If you are buying a sustainable business with a consistent operating history)
• Discounted Cash Flow - Cash can't be manipulated as easily by accountant as earnings or assets. Ultimately, cash return in the future (sell the stock or dividends) is the one thing that investors want when buying a stock.
•  the value of any stock, bond or business today is determined by the cash inflows and outflows – discounted at an appropriate interest rate – that can be expected to occur during the remaining life of the asset
• The difficulties of estimating cash flow growth rates and estimating discount rates as big areas of concern. Small changes in inputs can result in large changes in the value of a company, given the need to project cash flow out forever.
• Earning Power Value -   Assumes 0 growth rate. Is defined as the company's sustaintable earnings divided by the company's cost of capital. 
• It doen't muddy the valuation process with future predictions, but evaluates a company based on its current and historical stuation alone.
• It is also a potential wekness in that it may systematically undervalue growth companies - values investor might regard this a being part of the MOS - but in normal markets it may even be difficult to find a company that's selling for less than its EPV.
• Finding the intrinsic value of a stock is a very tricky art but that doesn’t mean that you should refrain from doing it.
•  If you are absolutely certain that a company can generate a steady flow of cash in the future, you can have great confidence that the true value for that company lies within a certain range. - It becomes a mast to which the investor can tie his decisions when the waters become choppy. Certainty in decision making is the goal.

References:-

• How to calculate what a stock’s really worth kcchongnz (private)