Why do stocks' fair value estimates change?

We explain some of the main reasons Morningstar equity analysts may adjust their assessment of a stock's intrinsic value.

Karen Wallace 3 April, 2017 | 5:00PM

Question: Why and when does Morningstar change fair value estimates for stocks?

Answer: There are many reasons Morningstar equity analysts might make a change to our fair value estimates. Many times the change is not a large, wholesale change; it's often the result of a small tweak to our model based on a time-value-of-money update, or an increase or decrease in the underlying inputs in our model based on new information revealed in quarterly earnings reports.

But other times we do make material changes to our fair value estimates when new information becomes available that causes us to re-evaluate our near-term or long-term thesis.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Advanced Micro Devices Inc82.07 USD4.48
Apple Inc134.47 USD1.85
Bristol-Myers Squibb Company64.48 USD1.04
Costco Wholesale Corp367.84 USD1.28
Merck & Co Inc77.20 USD1.05
Rayonier Inc35.11 USD0.03
Reckitt Benckiser Group PLC ADR18.61 USD1.28
Twitter Inc70.94 USD1.72
Weyerhaeuser Co38.55 USD1.39

About Author

Karen Wallace

Karen Wallace  Karen Wallace, CFP® is Morningstar’s director of investor education.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies