It was Benjamin Graham, the father of Value Investing and tutor of Warren Buffett, who first coined the term ‘margin of safety’. He believed that if you could buy a company at a significant discount to its 'intrinsic value' then the 'margin of safety' would protect the investor from errors of judgement, market volatility and other unknowns. But of course the true value of a stock can be very hard to work out and different methods can give very different answers. We provide a chart on the Stock Report which aims to provide an at a glance indication of the discount or premium of the share price to different valuation models.
This is the most subjective piece of analysis on the Stock Report as there are certain assumptions at the heart of each model. The models span growth valuations, peer group comparables and more conservative 'liquidation' valuations.
You can click through using the labels in this widget to learn more about the models as you wish using the Valuation Model Tool. There you can edit the inputs.