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Market Fair Value

Is the market cheap or expensive? The chart below tells the story based on Morningstar’s fair value estimates for individual stocks.

Overvalued

Undervalued

Current Fair Value Ratio: 1.01

The graph shows the ratio price to fair value for the median stock in the selected coverage universe over time.

A ratio above 1.00 indicates that the stock’s price is higher than Morningstar’s estimate of its fair value. The further the price/fair value ratio rises above 1.00, the more the median stock is overvalued. A ratio below 1.00 indicates that the stock’s price is lower than our estimate of its fair value. The further it moves below 1.00, the more the median stock is undervalued.

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