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Glossary · Valuation

Cautious, base and optimistic cases

Three fair values built from three sets of assumptions about growth and margins.

Why it matters

The future is uncertain, so one number would be false precision. The spread between the cases tells you how much the answer depends on what happens next.

How to read it

A price above the optimistic case means even good news is already paid for. A price below the cautious case means the market expects things to go badly.

Related

Fair valueOur estimate of what one share is worth, based on the cash the business can produce.Buy price (margin of safety)The fair value minus a safety margin. Below this price we call a stock undervalued.

In the Cluenex app, this explanation opens next to every cautious, base and optimistic cases figure, with the live reading for the stock you are looking at. Open it in Cluenex