Valuation Terms
Intrinsic Value
An estimate of what an asset may actually be worth based on fundamentals rather than current market price.
Also called: underlying value
What it means
Intrinsic value is an estimate of underlying worth based on the business itself, such as its future cash flows, assets, or earnings power. Because it depends on assumptions, it is not a precise number everyone agrees on.
Why it matters
It reminds users that market price and business value are related but not always the same.