Understanding the Fair Value Indicator
The Fair Value indicator estimates a stock's intrinsic value based on its dividend and compares it to the current price. Positive percentages indicate potential undervaluation.
What It Measures
- Undervaluation %: How much the stock is above/below estimated fair value
- Fair Value (Yield-Based): Estimated price based on median historical yield
- P/E Percentile: Where current P/E ranks vs. 5-year history
How to Read the Status
| Status | Undervaluation | Meaning |
|---|---|---|
| 🟢 Good | ≥ +20% | Significantly undervalued vs. historical yield |
| 🟡 Neutral | -10% to +20% | Roughly fair value |
| 🔴 Bad | < -10% | Overvalued vs. historical yield |
How Fair Value Is Calculated
We use the median 5-year yield to estimate what price would give you that same yield today:
Fair Value = Current Annual Dividend ÷ Median 5-Year Yield
What to Do
- Good: Attractive valuation if dividend is sustainable. Combine with safety checks.
- Neutral: Fairly priced. Focus on dividend quality and growth for returns.
- Bad: Price is high relative to historical dividend value. Consider waiting or accepting lower yield.