The Function of Intrinsic Stock Value

[Suba]

Intrinsic value is the real value of a stock, so we can understand that intrinsic value is not book value or market value. Although there are several methods for calculating a stock's intrinsic value, I personally prefer a simpler and easier method, namely the Price to Earnings Ratio or relative method.

If we can determine a stock's intrinsic value, we can evaluate it in various ways, such as:
We can determine whether the stock we are targeting is fair value, overvalued, or undervalued.
We can make rational decisions about whether to buy, sell, or simply hold if we already own the stock.
We can predict long-term returns, etc.

 

[Augusta]

The function of intrinsic stock value is to provide a measure of a stock's true worth, independent of its current market price. It helps investors assess whether a stock is undervalued or overvalued