Price vs Value
Fair value is an estimate of what a stock could be worth — not a promise of where the price will go.
In Simple Words
Fair Value Intelligence estimates what a company might be worth based on its fundamentals, then compares that estimate to the current market price. If the price is below the estimate, the stock may look 'undervalued'; if above, 'overvalued'. This is an estimate, not a target price.
Why It Matters
It helps you avoid overpaying. A 'margin of safety' is the gap between price and estimated value — a cushion if your estimate is wrong.
Key Terms
An estimate of what an asset is really worth, based on fundamentals.
The cushion between price and estimated value; bigger means more protection against error.
Trading below or above the estimated fair value.
How to Interpret It
Example: market price $80, estimated fair value $100. The gap suggests the stock may be undervalued — but it does NOT mean the price will rise to $100. It can stay undervalued or fall further.
Beginner Mistakes
- Assuming the price will reach the fair value estimate.
- Trusting a single estimate when several models disagree.
Try It Yourself
Find a company's fair value estimate and current price in Warifin. Note the gap and write whether it suggests a margin of safety — without concluding the price 'must' rise.
Key Takeaway
Fair value is an estimate with a margin of safety — never a promise.
Open the real tool to practice.
Knowledge Check
Choose an answer, then check.1. If price is below estimated fair value, the stock…
2. Margin of safety is…
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