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A stocks GAVA (pronounced like lava) is a measure of its intrinsic value. The GAVA (GuruFocus Automatic Value Appraisal) is calculated using a formula developed by GuruFocus and 4 pieces of public data: Earnings
The GAVA also takes into account 3 special situations: Unsustainable growth
The GAVA calculation is fully automated. And never requires more than 7 inputs:1. Earnings
Every GAVA calculation uses 4 variables. The 3 additional inputs are only used to determine when special rules apply to a stock. Depending on which special rules apply to a stock, different metrics are used to calculate the stocks GAVA.
Unlike most measures of intrinsic value, the GAVA is equally applicable to holding companies, banks, railroads, retailers, and industrials.
The GAVA needs to be combined with a stocks business predictability rating before you can use it to make a buy or sell decision. The more predictable a company is, the more accurate its GAVA will tend to be.
Finally, never buy a stock simply because its GAVA is higher than its current price. Only buy a stock when there is a sufficient margin of safety. GuruFocus - following in Ben Grahams footsteps - recommends a margin of safety of 50%.
In other words, a stocks GAVA should be at least 1.5 times its price for the stock to be a good buy.
(Earnings) E equals
FINANCIALSThe highest of:
NON-FINANCIALSThe highest of:
(Dividends) D equals Dividends per share
(Growth) G equals
FINANCIALSThe lowest of:
NON-FINANCIALSThe lowest of:
(Bond Yield) B equals Moodys 30-Year AAA Bond Yield