Step Into the Fair Value Time Machine

Question: I find Morningstar's fair value estimates for equities to be a useful tool in determining whether a stock's price is too high, too low, or just about right. But is there any way to see how a stock's fair value estimate has changed over time?

Answer: Morningstar's current fair value estimates are easy enough to find but are available only to Premium users. Just type any public company name or ticker symbol in the Quote box at the top of any page on Morningstar.com and press the Quote button. You'll then be delivered to a page that, in the Morningstar's Take section, includes Morningstar's fair value estimate for the stock, along with Consider Buying and Consider Selling prices and other ratings. (By clicking on the Stock Analysis tab, Premium users can see a long-form report on the security, detailing key pros and cons about the stock.)  A recent Short Answer column discussed how Morningstar's equity analyst team arrives at fair value estimates for the more than 1,800 companies it covers. And sure enough there is a way to find historical information on previous fair value estimates for each stock Morningstar covers. In fact, there are a few ways, all of which are available to Premium members. (Not a Premium member, click here to begin a free 14-day trial.)

Historical Fair Value Estimates in Chart Form
One method allows the user to view historical fair value estimates and actual stock prices in a single chart, which is a nice way to see how the market valued the stock over time versus what our analyst team believed the stock was intrinsically worth. To find the first version of the chart, once you've landed on the Quote page, click on the Chart tab along the navigation bar at the top of the report. Then select the time frame you want to examine from the options listed above the chart. To overlay fair value estimates on top of the actual stock price, click on the Indicators tab to the upper right and select Fair Value in the window that opens. Place your cursor over any point on the chart to see data points for the stock as well as its fair value estimate for that date. Below is an example. Click here to see a larger image. 

For another version of the chart that allows you to see how the Morningstar Rating for the stock has changed over time, click on the Classic Chart link on the lower right-hand corner of the Chart page. That opens an earlier version of the stock charting tool in a new browser window. You'll see four tabs along the top of the chart: Price, Fundamental, Technical, and Fair Value. Click on the Fair Value tab (again, this is only available to Premium users), and you'll see the fair value estimate charted against the actual stock price over time with historical Morningstar star ratings immediately below the graph. Below is an example.

You also can add other ticker symbols to your chart for easy back-and-forth comparison between stocks and their fair value estimates.

Historical Fair Value Estimates in Context
Another way to find historical fair value data is by looking at past Analyst Reports for each stock. If you click on the Stock Analysis tab for a given stock, you'll see just below it a link labeled Analyst Report Archive. Click on it, and you'll find previous Analyst Reports and Stock Analyst Notes for the stock. The reports include updated fair value estimates for the time period. This approach is useful to provide context as to why fair value estimates were changed and to find other key information about the company.

Have a personal finance question you'd like answered? Send it to TheShortAnswer@morningstar.com.