What is intrinsic value?
Intrinsic value is the true worth of a stock based on fundamental analysis of its future cash flows, independent of its current market price.
Intrinsic value represents what a stock is actually worth based on the company's fundamentals - its ability to generate cash, its assets, and its growth potential. It's calculated using methods like Discounted Cash Flow (DCF), which projects future cash flows and discounts them to present value.
Key points: • Market price fluctuates daily based on sentiment; intrinsic value changes when fundamentals change • If intrinsic value > market price, the stock may be undervalued (potential buy) • If intrinsic value < market price, the stock may be overvalued (potential sell) • The difference between intrinsic value and market price is called "margin of safety"
Intrinsic Investor calculates intrinsic value using 7+ methods including DCF, Graham Number, Owner Earnings, and Monte Carlo simulation for uncertainty ranges.
Source: Intrinsic Investor (https://www.intrinsic-investor.com)
This answer is for educational purposes only, not investment advice.