METHODOLOGY
How We Calculate Fair Price
Three independent valuation models converge into a single fair price for every stock. Updated daily.
Discounted Cash Flow Analysis
Discounted Cash Flow analysis projects a company's future free cash flows and discounts them to present value using a risk-adjusted rate of return (WACC). This method focuses purely on fundamentals — what the business will generate in cash over time. We project 10 years of cash flows based on historical growth trends and analyst estimates, then calculate a terminal value for the period beyond. DCF is the most widely respected valuation method among institutional investors and forms the backbone of our model.
Peer Comparison Analysis
Relative valuation compares a stock's key financial multiples — P/E, EV/EBITDA, and Price-to-Sales — against companies in the same sector. If a stock trades at a significant premium or discount to its peers, this method captures that deviation. We compare each stock against all companies in its sector to determine whether it is cheap or expensive relative to comparable businesses. This approach is fast, market-aware, and provides a useful reality check against the DCF estimate.
Wall Street Price Targets
We aggregate price targets from Wall Street analysts covering each stock. While individual analyst targets can be biased, the consensus average across multiple analysts provides a market-informed reference point. This component adds a layer of expert judgment to our quantitative models and helps smooth out extreme estimates from either the DCF or relative valuation approaches.
WHY A BLENDED MODEL?
No Single Model Is Perfect
Every valuation method has inherent limitations. DCF analysis is highly sensitive to growth rate assumptions — a small change in projected growth can dramatically alter the calculated fair value. Relative valuation assumes that peer companies are fairly valued, which may not be true during sector-wide bubbles or crashes. Analyst price targets can be influenced by conflicts of interest, recency bias, or herd mentality.
By combining three independent approaches with carefully calibrated weights, we reduce the impact of any single model's weaknesses. When all three methods agree, confidence in the fair value estimate is high. When they diverge significantly, it signals uncertainty that investors should consider.
The 50/30/20 weighting reflects the relative reliability and theoretical soundness of each approach: DCF provides the most rigorous fundamental analysis, relative valuation adds market context, and analyst consensus incorporates expert judgment.
COVERAGE AND UPDATES
Global Stock Coverage, Daily Updates
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STOCKS COVERED
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EXCHANGE COVERAGE
Fair Price Index covers stocks across all major global exchanges including NASDAQ, NYSE, London Stock Exchange, Euronext, Toronto Stock Exchange, Australian Securities Exchange, and more. Fair values are recalculated daily after each market closes, incorporating the latest financial data, analyst estimates, and market prices.
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Disclaimer: Fair Price Index provides informational content only and does not constitute investment advice. Fair value estimates are based on quantitative models and may not reflect all factors affecting a stock's price. Always conduct your own research and consult a qualified financial advisor before making investment decisions.