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Fundamental Analysis & Valuation

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Fundamental Analysis & Valuation

Margin of Safety

The discount between the price paid for a security and the analyst's estimate of its intrinsic value.

Margin of Safety = (Estimated Intrinsic Value - Market Price) / Estimated Intrinsic Value x 100 % Fundamental Analysis & Valuation

Moat

A durable structural advantage that lets a company earn returns above its cost of capital for many years without being competed away.

Test: returns on capital stay above the cost of capital across a full cycle, and the reason can be named as a specific barrier qualitative