Equity: justified and intrinsic exactly

AnalystAlan

Justified and intrinsic: what does these two exactly refer to? Thanks.

chandsingh

The justified value is the value derived based on the fundamentals of the stock (growth rate, ROE, etc.).

The intrinsic value is also a value derived based on fundamentals, however intrinsic value may be different for different investors (based on each one's assumptions). If the market is inefficient the market value may be different from intrinsic value (i.e. overvalued or undervalues) and the investor hopes that the market price of the stock will be equal to intrinsic value when the inefficiency ends.