Intrinsic value
Intrinsic value is the answer to the only question that ultimately matters about an asset: what is it worth to own outright? For a business, that means the cash an owner could take out of it over its remaining life, discounted back to today. It’s a different thing from the market price, which is just the most recent opinion — the whole discipline of value investing lives in the gap between the two.
The honest part: intrinsic value can’t be computed precisely, by anyone. It depends on cash flows that haven’t happened yet. Every estimate — including ours — is a rough figure whose usefulness comes from conservative assumptions, not from decimal places.
How the Moat Index measures this
We estimate a normalized figure for owner earnings from the company’s SEC filings and capitalize it using a deliberately conservative discount rate and a hard cap on assumed growth — assumptions the methodology spells out and company pages display alongside the estimate. That yields an intrinsic value per share, which the site compares to the recent price to compute the margin of safety. Because the assumptions are conservative on purpose, our estimate will often look low against the market — that’s the design, not an accident. It’s an educational estimate, not a price target.