Essential guide · Free to read
How to use StockyView in your stock analysis
A share price reflects both today's economics and expectations about the future. StockyView builds a fundamental reference point and helps you see how much of the price rests on assumptions beyond it. The purpose is not a buy or sell signal, but to show where your own analysis should begin.
The core idea
- 1Price tells you what the market is paying.
- 2Fundamental Value estimates what the business can justify under StockyView's assumptions.
- 3The gap between them shows where further investigation should begin.
Why does the gap exist – and which assumptions are needed for today's price to make sense?
Step 1 — Start with Fundamental Value
Fundamental Value is StockyView's estimated value of the underlying business, built on modeled revenue development, margins, cash flows, reinvestment, return on capital, WACC and long-term assumptions. It is an estimate under assumptions – not an exact intrinsic truth and not a price target.
The core question
What is the business approximately worth under these assumptions?
Step 2 — Compare price with value
The market price contains more than today's reported performance. Investors may pay for future products, market expansion, margin improvement, technology, new business models, competitive advantages and future optionality. A large difference between price and Fundamental Value is therefore not automatically an error – it is something that must be explained.
Three different valuation situations
None of these is a buy, hold or sell signal. Each describes which questions matter most.
A · Price below Fundamental Value — potential discount
What it may mean
The market may be offering the business at a discount relative to StockyView's assumptions. That does not automatically mean the stock is undervalued. A stock can look cheap precisely because the business is getting weaker – a value trap. “Cheap relative to a model” and “attractive investment” are not the same thing.
Questions to ask
Why does the discount exist? Are the assumptions still reasonable? Is the business deteriorating, or is the balance sheet creating risk? Are margins or growth weakening structurally? Is the market pricing a risk the model does not fully capture? Does Bear, Base and Bull still support the valuation?
B · Price near Fundamental Value — expectations close to the Base case
What it may mean
The market is roughly aligned with StockyView's modeled fundamental scenario. That does not mean the stock cannot rise, that the analysis is finished or that there is no opportunity. Future returns may instead depend more on the business itself compounding: revenue growth, margins, ROIC, cash generation and reinvestment quality.
The question to ask
Can the business develop better or worse than the assumptions already embedded in the valuation? Monitor actual execution against the Base case.
C · Price above Fundamental Value — the market is paying for more future
What it may mean
This creates a Future Premium: a larger part of today's price depends on future outcomes beyond StockyView's modeled value. It does not automatically mean the stock is overvalued, that the price must fall or that you should sell. A strong company can deserve a high valuation.
Questions to ask
What must go right? Which businesses or initiatives carry the expectations? What growth does Reverse DCF imply – and is it economically realistic? What happens if execution disappoints? When expectations are high, negative news about the key future drivers can have a disproportionate effect on the share price.
| Fundamental Value from current operations | 100 |
|---|---|
| Market price | 180 |
| Part of the price the future must carry | 80 |
The extra 80 is not automatically “wrong”. Identify which future outcomes might explain it – a new technology, autonomous products, robotics, a new market or major margin expansion. If much of the optimism rests on one driver, news about that driver can move the stock strongly, because it changes expectations about the future portion of the valuation.
Step 3 — Use the Future Premium and Reverse DCF
Two different questions
Future Premium
How much of the market price sits above StockyView's modeled Fundamental Value?
Reverse DCF
What initial growth would be required if growth alone explained today's price, while the other modeled assumptions remain fixed?
Compare the fundamental Base assumptions, the Reverse DCF requirement and the Future Premium. Then ask: is the market's implied requirement plausible?
Step 4 — Identify what must go right
The most valuable part of an analysis is often seeing which assumptions or business areas carry the valuation. Use “What must go right?”, the business interpretation and the operational bottleneck and sensitivity. If the market leans heavily on one new product, margin expansion, international growth, a new technology or capital efficiency, those are the things to follow most closely.
Step 5 — Follow the evidence over time
- 01
Did the underlying economics change?
Read the report or news for what it says about the business, not the share price.
- 02
Were the assumptions strengthened or weakened?
Compare with the assumptions behind Fundamental Value.
- 03
Was a driver behind the Future Premium affected?
That is where new information weighs most.
- 04
Are the numbers moving toward or away from the required path?
Growth, margins, ROIC and cash flow.
- 05
Should the analysis be rerun?
Run a new analysis when the underlying information has changed.
Principle
Do not react only to whether the share price moved. Ask whether the information changed the investment case.
Three common mistakes
- 01
“Price below Fundamental Value = automatic bargain”
Understand why the discount exists and test the assumptions.
- 02
“Fundamental Value is an exact price target”
The value depends on assumptions. Use scenarios and sensitivity.
- 03
“Price above Fundamental Value = automatic sell”
Understand what the Future Premium represents and whether the expectations are plausible.
The StockyView framework
Price shows what the market is paying. Fundamental Value shows what the business can justify under StockyView's assumptions. The Future Premium shows how much more the future has to carry. Your task is to judge how plausible that future is – and to follow whether the evidence grows stronger or weaker.
Next guide
Market expectationsTest the method on a real company
Run an analysis and compare Fundamental Value, market price, the Future Premium and the market's implied requirement in one flow.
Start an analysisReady to go deeper?
Learn more about DCF, Reverse DCF, WACC, ROIC, scenarios and how to build a complete stock valuation with StockyView.
Educational content
StockyView provides analytical and educational information, not personalised investment advice. Valuations depend on assumptions and involve uncertainty. Do your own research and consider your own circumstances before making investment decisions.