The Fair Value Model

Price is what you pay; value is what you get

A stock's market price is set by supply and demand — what the most recent buyer and seller agreed on, at this moment. That price can drift far from what the underlying business is worth. Fundamentals like earnings power, cash generation, and growth trajectory anchor value over time, even when short-term sentiment pulls price in a different direction.

The idea behind estimating intrinsic value is straightforward: if you can build a reliable picture of what a business is worth based on its financial profile, you can compare that estimate to the current price and ask whether the gap is meaningful. A large positive gap — where the estimated value sits well above the current price — means the model reads the stock as priced below its estimated worth; a negative gap means the reverse. But the critical word throughout is 'estimate.' No model can see the future, and any mechanically derived value should be treated as probabilistic context rather than fact.

ŷRobot's fair-value model approaches the problem quantitatively, drawing on a broad set of fundamental and market inputs to estimate where a stock's intrinsic value stands relative to its current price. The result is not a price target. It is a reference point — one data point in a multi-signal framework — that helps put price in perspective.

What the model looks at

Under the hood, ŷRobot uses a CatBoost regression model — a gradient-boosting algorithm well-suited to structured tabular data — trained on roughly 40 inputs drawn from four broad categories: fundamentals (earnings, margins, balance sheet ratios), growth (revenue and earnings trends), cash flow (operating and free cash flow measures), and price momentum (recent price behavior relative to the stock's own history).

Blending these four categories matters because different types of companies look different under any single lens. A high-growth company with minimal current earnings but strong cash-flow trajectory looks misleadingly expensive on simple earnings multiples. A mature cash-generative business may look stale on growth metrics alone. By combining fundamentals, growth, cash flow, and momentum, the model gets a more complete picture of what the business is doing across multiple dimensions.

The model outputs a single number: an estimated fair value. That estimate is probabilistic — the model can be materially wrong, especially for companies going through structural change, sudden macro shifts, or events that fall outside historical patterns. The ~40 inputs include publicly available financial data, which means the model reflects the most recent reported figures, not real-time news or unannounced changes in business trajectory.

Reading the gap

On each stock page, ŷRobot displays the estimate under the label 'ŷRobot Intrinsic Value, 6M from Last Report,' alongside a Valuation Gap percentage — the difference between the estimated value and the current price, expressed as a percentage of the current price. A positive Valuation Gap means the model's estimate sits above the current price; a negative gap means it sits below.

The '6M from Last Report' qualifier is important: the estimate projects roughly six months out from the most recent financial report date. It is not a current snapshot — it is a model-derived forward-looking reference tied to the last available data. When a company reports new earnings, the estimate updates as fresh data flows in.

The most useful way to read the Valuation Gap is as a multi-quarter thesis, not a timing call. A large positive gap does not mean the price is about to rise; it means the model, based on current fundamentals, estimates the business is worth more than its current price. Whether and when that gap closes depends on factors the model cannot predict — market sentiment, macroeconomic conditions, company execution, and more. Patience and an anchor-free perspective on your own purchase price are more valuable than treating the gap as a short-term signal.

Where to find it

The fair-value estimate and Valuation Gap appear on every stock page in the Intrinsic Value card. That card shows the estimated value, the current price, and the Valuation Gap percentage — along with the last-report date that anchors the estimate.

In the Smart Screener, the AI Estimation column surfaces the Valuation Gap across all covered stocks, letting you sort and filter by valuation signal alongside the other analytical dimensions ŷRobot tracks. The fair-value gap also feeds directly into the AI score as its largest single component, carrying a 30% weight in the composite.