Intrinsic value is what a business is actually worth to an owner — the present value of every dollar of cash it will produce. Use the right tool for the right company: a full 10-year DCF, Benjamin Graham's formula, or the Gordon Growth dividend model.
Trailing 12-month free cash flow from the 10-K / 10-Q.
Be conservative — even great businesses rarely sustain >15%.
Use 2–3% (long-run GDP). Must be below discount rate.
8–10% for stable blue chips, 12–15% for higher risk.
Compare against the current share price. A 30%+ discount is a Buffett-style buy zone — assuming a durable moat and trustworthy management.
Divide the current market price by the intrinsic value. If it's below 0.7, the stock trades at a 30%+ margin of safety — a Buffett-style buy zone, assuming the business has a durable moat and trustworthy management. Always sanity-check across multiple growth and discount-rate scenarios.
Disclaimer: This is not financial advice. All analyses are for educational purposes only. Always do your own research (DYOR) and consult a licensed financial advisor before making investment decisions. Past performance does not guarantee future results.
