Glossary term
Intrinsic Value
The value a business is worth based on its assets, earnings power and prospects — independent of its quoted price. Benjamin Graham treated it as an estimated range built from conservative assumptions, never a single precise number.
Definition
Intrinsic value is what a business is worth judged by the facts — its assets, its demonstrated earnings power, its dividend record and its prospects — rather than by what the market happens to be quoting for it on a given day. Graham introduced the distinction in Security Analysis (1934) specifically to separate investment from speculation: an investment decision rests on an estimate of intrinsic value, a speculative one rests on a bet about what other people will pay next. The estimate is not meant to be exact. Graham described it as a range wide enough to accommodate uncertainty in the inputs, and useful precisely because a rough range is enough to tell whether a price is clearly cheap, clearly expensive, or too close to call either way.
How It Gets Estimated
Three approaches dominate practice. Asset value sums what a business's tangible holdings are worth, largely independent of what it earns, and is most useful for asset-heavy or distressed businesses where earnings are unreliable. Earnings power value capitalizes a normalized, sustainable earnings figure at an appropriate discount rate, assuming no growth, and suits mature businesses with stable margins. Discounted cash flow projects future free cash flows and discounts them back, explicitly pricing growth — and is the most sensitive of the three to the assumptions fed into it, since small changes in the growth or discount-rate input can move the answer by a wide margin. None of the three produces a single correct number; each brackets a plausible range, and the width of disagreement between methods is itself information about how much conviction the estimate deserves.
How Closelook Uses It
On stock pages, established multiples like FCF yield, EBITDA multiple and ROIC supply the raw inputs a reader needs to build their own intrinsic-value range — Closelook reports the ratios and their percentile rank across the index universe, not a finished verdict on worth. The separation is deliberate: an intrinsic-value estimate depends on judgment calls about growth and discount rates that belong to the reader, not to a data feed, and folding them into a single number would hide exactly the assumptions a careful reader needs to see and be able to challenge. The stock pages supply the inputs; the estimate, and the margin of safety demanded against it, stays the reader's own work, the same division of labor Graham assumed when he called the value a range rather than a verdict.