Margin of Safety

The discount between a stock's price and your estimate of its intrinsic value — a buffer against being wrong.

Part of the Intrinsic Value & DCF course · Lesson 15 of 15

Formula

Margin of Safety = (Intrinsic Value - Market Price) / Intrinsic Value

What it is

Margin of safety is the cushion you build in by buying a stock for meaningfully less than what you think it is worth. The concept, popularized by Benjamin Graham, acknowledges that valuation estimates are imperfect. The larger the discount, the more room for error in your assumptions.

Why it matters

It protects capital when your forecasts turn out optimistic or when unexpected events hurt the business. A wide margin of safety lets an investor be wrong about some inputs and still avoid a permanent loss, which is the core defensive idea in value investing.

How it's calculated

Estimate intrinsic value per share, then express the gap to the current price as a percentage of intrinsic value. A positive margin means the stock trades below your estimate; the bigger the percentage, the larger the cushion.

How Quintarthai uses it

Pair an intrinsic-value estimate from a company's deep-analysis page with the live quote to gauge how much margin of safety, if any, the current price offers.

Cross-border note. For a dual-listed name, compare price and intrinsic value in the same currency and on the same listing. A FX move alone can widen or narrow the apparent margin without any change in the underlying business.

FAQ

How big should the margin of safety be?

It depends on how confident you are in your estimate. Investors often want a larger discount — say 25-50% — for businesses that are harder to predict, and accept a smaller one for stable, predictable companies.

See Margin of Safety on a real company

Open any stock in Quintarthai and explore it live across the screener and company pages.

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