Margin of safety

Completing a valuation to determine a company's intrinsic value is a subjective process. This function allows users to set a percentage (between 1% and 20%) that sets a range above and below the calculated value to allow for errors in assumptions. This margin of safety doesn't guarantee a valuation will be correct but it allows an analyst to consider a margin of safety.

For example if the valuation for a company gives a value of $1.00 per share and the Margin of Safety is set at 5%.

  • If the current market value is below $0.95 then Valuecruncher will say the share is 'Overvalued'.
  • If the current market value is above $1.05 then Valuecruncher will say the share is 'Undervalued'.
  • If the current market value is between $0.95 and $1.05 then Valuecruncher will say the share is “Within The Margin Of Safety