5 fair value models, side by side

Each model captures a different theory of what a stock is worth. We run all five and trim the outliers — when models agree, our confidence is high; when they spread, the disagreement itself is signal.

Cash flow model (DCF)

Forecasts free cash flow for 5 years, applies a terminal-growth assumption, and discounts back at WACC. Best for steady, profitable cash generators. Skipped when FCF is negative.

Peer comparison (Multiples)

Applies typical industry-peer multiples (forward P/E, EV/EBITDA, P/S, P/B) to this company's fundamentals. The "what would Wall Street pay" benchmark.

Peter Lynch rule

Lynch's shortcut: fair P/E equals (growth rate + dividend yield) × EPS. A growth-and-yield rule of thumb. Skipped when EPS is negative.

Earnings power (EPV)

Bruce Greenwald's no-growth lens — value the company on its current normalised earnings only, ignoring growth optionality. Acts as a conservative floor.

Dividend model (DDM)

For dividend payers — present value of all future dividends, growing in two stages. Skipped automatically when the yield is below 1%.

For research and education only. Not investment advice. See our full disclaimer.