How to Evaluate Intrinsic Value: Key Questions to Ask Before Buying an “Undervalued” Stock

October 11, 2025

As per definition, “Intrinsic value is the perceived true value of an asset, which is determined by its underlying fundamentals and cash flows, not its current market price.” Simply put, its about valuing the business based on its current up to date fundamentals to provide a benchmark price to see if the pricing the market is pricing this entity at is overvalued, or undervalued.

While most retail investors can be rather decisive to conclude that if a stock price is much lower than its intrinsic value, then its probably a good price. We will recommend these 3 additional questions to ask yourself to increase your odds of buying into a value stock.

  1. Ask yourself if the company is able to keep up the growth – Ask yourself if the company will still be able to sustain this growth rate in the coming years or at least for the period you intend to stay within. Our growth rates are currently based on very conservative 5 year growth rates or entire period growth metrics. Our intrinsic values cheat sheet comes with the average growth rate of the company over the past 5 yrs or entire period since publicly listed.
  2. Check if the company has a strong enough financial strength – What is its debt to equity ratio and if it can sustain in a down turning economy. How much debt are you carrying if you were to enter the stock at the current price.
  3. What is the company’s currrent EPS and how does it compare among to companies in the same niche – This normally can be seen from the company’s P/E if the company is too overvalued or undervalued. We’ve placed all these metrics together on our Stock cheatsheet so its very easy for you to analyze and compare.

These are the 3 basic questions to further ask yourself before a quick purchase into the stocks you feel are currently undervalued and would like to make a quick purchase. While we understand that the tendency to buy into a good value stock might strong when feeling hits or when prices start rising, to stop and rethink this 3 simple points can help you to make a more intelligent decision. While we normally recommend a deeper analysis, procrastination can also cause losses while you overthink a stock to purchase.

At Dollar Clarity, we keep things simple. Our metrics, data and analysis are so simple you can make intelligent decisions, fast, easy and decisive.

DollarClarity is not a brokerage. We don't offer investments or sell you any form of investment instruments, packages. We simply offer detailed and filtered information so investors have more clarity and focus on managing their investments. We are consistently growing based on feedbacks from our clients and moving ever more readily with the markets. Before making any investments, you should always do your own due diligence prior to any market purchases.