Fair Value Estimate

The Morningstar Fair Value Estimate helps investors understand the long-term, intrinsic value of a stock, helping them see beyond the present market price. It represents a Morningstar analyst's estimate of what a stock is worth.

Each stock's fair value is estimated by using a proprietary discounted cash flow model, or DCF. This model assumes that a stock's intrinsic value is equal to the total free cash flows the company is expected to generate in the future, discounted back to the present at a rate commensurate with the riskiness of the cash flows. Fair value estimates are highly sensitive to Morningstar's projections of future cash flows and other assumptions.