CluenexA share is worth the cash the business will hand its owners over its life, in today’s dollars. Everything else is a shortcut.
The engine
We project each company’s cash flows with a discounted cash flow model built for its kind of business: a bank is valued differently from a chip maker. Fast growers get a longer runway before growth fades, and riskier companies a higher discount rate.
Three cases, not one number
The base case is the published fair value. A cautious and an optimistic case show how much the answer depends on what happens next. When the range is wide, the stock is harder to value and deserves a bigger safety margin.
The buy price
We only call a stock undervalued below its buy price: the fair value minus a margin of safety. Between the buy price and the upper band we say “within fair range”.
Growth priced in
We also run the model backwards: what yearly growth does today’s price assume? That growth priced in is often the clearest way to see a risky price.
When there is no number
If profits are too small or uneven, a fair value would be a guess dressed as maths, so we mark the stock speculative instead.