Contrast relative with absolute valuation models and give examples of each kind

Absolute valuation models estimate intrinsic value from the asset's own characteristics, usually by discounting expected dividends, free cash flow or residual income. Asset-based models, which value a company from the market value of its assets less its liabilities, are also absolute. Relative valuation instead prices a share against similar assets, typically with multiples such as price to earnings or enterprise value to EBITDA, relying on the idea that similar assets should sell at similar prices. A relative model can show a share is cheap against its peers while the whole peer group is overpriced, so its answer is only relative to the benchmark. The two approaches complement each other, and analysts often use one to cross-check the other.