It's one of the aspects of Fundamental Analysis. It's been my weak spot, as I've learned mostly about Technical Analysis in the past.
The overview is that you look at balance sheets, cashflow statements, and income statements to find a company's growth (earnings), margins (efficiency), and yield (returns).
From those stats, you determine their Earnings Per Share (EPS), projected growth %, Price-to-Earnings (P/E), and the P/E relative to growth (PEG). By comparing those stats to other similar companies, you can get an idea of what the company is actually worth, versus the price at which being currently traded.
