Intrinsic value
Also called: fair value, intrinsic worth
An estimate of what a business is worth based on the cash it can return to its owners over its life, as opposed to its market price.
Intrinsic value is the present value of all future cash flows to owners. It depends on how much cash the business will generate, when, and how certain that is, all of which must be estimated, so it is best thought of as a range rather than a precise number.
Learn more in these lessons
- What intrinsic value meansWhat is intrinsic value, and how is it different from the share price?
- Comparable-company valuationHow do you value a company by comparing it with similar companies?
- Margin of safetyWhat is a margin of safety, and how big should it be?
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