What is Intrinsic Value?
The estimated true value of a business based on fundamentals, independent of market price.
In Depth
Intrinsic value is the present value of a company's expected future cash flows to owners, discounted at an appropriate rate. Different analysts produce different intrinsic value estimates because they make different assumptions about growth, margins, and risk. The concept is the foundation of value investing.
Example
A discounted cash flow model that produces $150 per share when the stock trades at $120 implies a 20% margin of safety.