How we value a stock

The premise

A business is worth the cash you can pull out of it over its life, discounted for the fact that you could have earned something else with the money. Growth only counts if the company has demonstrated it can reinvest earnings at a decent return. You never pay full price for a business — you wait for a margin of safety.

Three ideas Buffett and Munger have talked about publicly for fifty years. We took them seriously and built an engine around them.

Where the number comes from

Every input is a public, dated, verifiable source:

• Company financial filings submitted to the U.S. Securities and Exchange Commission — the 10-K annual reports, 10-Q quarterly reports, and material 8-Ks each company files itself.
• U.S. Treasury yields, published daily by the U.S. Department of the Treasury.
• Completed-day U.S. equity closing prices. We do not use intraday quotes and we do not chase the tape.

We do NOT use:

• Wall Street analyst earnings estimates or price targets.
• Sell-side research, guru portfolios, insider newsletters, or 13F filings.
• Anyone's opinion about where a stock is going.

How to read the numbers

For every company we cover, the page shows six things and nothing else:

1. Market Price — the last completed U.S. trading-day close, dated.
2. Estimated Fair Value— one dollar number. What the business is worth today based on its filings.
3. Fair Value Range (95%)— the low-to-high band around that number.
4. Safe Price — a conservative discount to the Estimated Fair Value at four confidence tiers (Loose 80% / Balanced 85% / Recommended 90% / Strict 95%). Higher confidence means a lower Safe Price and a thicker margin of safety. The website shows one tier at a time (default 90%); the app shows all four side by side.
5. Model classification— one of eight descriptive states (below). Never a buy or sell command. The model classifies; the reader decides.
6. Data Freshness — Live, Current, or Snapshot, plus the exact filing date the number is based on.

The eight classifications

Every classification renders under the fixed prefix Model classification: — the frame that says this is an output, not personal advice.

One additional classification, “Thesis Intact,” renders only inside the iOS app when a user has personally saved a reading below the Safe Price and the model still shows price below Estimated Fair Value. It never appears on the public site or in tweets.

How we know the numbers are honest

Before we ever published a Safe Price, we ran every historical version of every Safe Price against what the company's later filings said the fair value turned out to be. The rules of the test are strict, and they are the same for every company:

• Leave-one-out. When we score Apple, Apple's own history is removed from calibration. The engine has to price Apple as if it had never seen Apple before.
• Time-forward only. When we score a 2019 valuation, the engine can only know things that existed before 2019. It cannot peek at 2020 to make 2019 look smart.
• Lockbox year. An entire calendar year is walked out of the room before the engine runs. When it comes back, we compare its calls against that year.

Four validation numbers we are willing to publish (exact wording, denominators, and caveats attached — as required by our public contract):

How often we recheck a valuation

We recheck this valuation when a new SEC filing lands, when market price crosses our Safe Price, or when the safe horizon expires — whichever comes first.

For companies covered in our frozen research universe the page renders instantly from a precomputed row. For a typed-in ticker outside that universe we run a fresh valuation against the latest filings.

What we don't do

• No analyst estimates — not from us, and not from anyone else.
• No hidden model selector, no slider that swings the answer by 40%.
• No paywall on the number itself — the website is free. Freshness, alerts, the full ladder, the private tracker — those live in the app.
• No sector scores. Same idea, applied consistently, across every company we cover.
• No 12-month price targets. That is a forecast. Our number is not a forecast.
• No adjusting a valuation because we, or someone else, has a position in the stock. Every visitor sees the same output.

Frequently asked