AI Can Make the Relative-Valuation Process Less Subjective

by Paul Geertsema, Helen Lu and Kristof Stouthuysen

April 29, 2025

HBR Staff

Summary.

Relative valuation—using simple metrics to compare a firm’s value to its peers—is a cornerstone of financial decision-making. If a company earns $2 billion in profit, and if similar firms trade at 15 times earnings, then that company might be valued at $30 billion. This approach offers an intuitive starting point for understanding valuation ranges, standing alongside the more detailed discounted cash-flow analysis methodology.

Paul Geertsema is an associate professor of accounting and AI at Vlerick Business School, a visiting professor at KU Leuven, and a member of the Centre for Financial Leadership and Digital Transformation. He is the author of Machine Learning for Managers, recently published by Routledge. Prior to his return to academia, Paul held positions at Citigroup, Credit Suisse, and Barclays Capital, where he worked as a derivatives trader.

Helen Lu is an associate professor of accounting and AI at Vlerick Busines School, a visiting professor at KU Leuven, and a member of the Centre for Financial Leadership and Digital Transformation. She worked in investment banking at Deutsche Bank and Credit Suisse prior to pursuing an academic career.

Kristof Stouthuysen is a professor of management accounting and AI-driven finance at Vlerick Business School and KU Leuven. He also directs the Centre for Financial Leadership and Digital Transformation, where he advises CFOs and finance teams on leveraging machine learning and AI to enhance financial decision-making and drive strategic insights.

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AI Can Make the Relative-Valuation Process Less Subjective

Summary.

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