A stock's share price is not its value - it is its price right now. Understanding the difference between price and value is the starting point of all rational investing. This guide explains the four types of value and how to calculate them.
May 2026
8 min read
Beginner–Intermediate level
Price vs value: the fundamental distinction
Benjamin Graham, the father of fundamental analysis, summed it up in one sentence: "Price is what you pay, value is what you get."
A stock's share price is determined at every instant by supply and demand - it reflects the collective opinion of market participants. That opinion can be rational, irrational, driven by fear or euphoria. It often diverges from the true economic value of the underlying company.
For a fundamental investor, the goal is to buy when the price is below the value - and to wait for the market to recognise that value.
The four types of value of a stock
Type 1
Par value
The issue value recorded in the articles of association. Purely accounting and often symbolic (€1, €0.10). It has no relationship to the share price.
Share capital / Number of shares
Type 2
Book Value
The company's net assets divided by the number of shares. What each shareholder would theoretically receive in a liquidation at book value.
Net assets / Number of shares
Type 3
Market value (Price)
The price at which the stock trades on the market at a given time. Determined by supply and demand. Can diverge from fundamental value.
Market cap / Number of shares
Type 4 — Key
Intrinsic value
The true economic value estimated from expected future cash flows. This is the fundamental investor's target. Calculated by DCF, comparable multiples or revalued net assets.
Σ discounted future FCF
Book value per share calculator
Book value & P/B calculator
10,80 €
Book value / share
0,88x
P/B ratio
−12,0 %
Discount / book value
How to estimate intrinsic value
There is no single method. The most widely used approaches for European small caps:
1
Comparable multiples: compare the stock's EV/EBITDA, P/E and P/B multiples with those of its sector peers. Quick and anchored in market reality. Limited by the quality of the comparables.
2
DCF (Discounted Cash Flow): discount future free cash flows at the cost of capital. The theoretical reference method, but very sensitive to growth and discount-rate assumptions.
3
Revalued net assets (RNA): relevant for holding companies, property companies, or businesses with significant tangible assets. Revalues assets at their market value rather than book value.
4
FCF yield: FCF / market capitalisation. A yield above 8-10% often signals a discount. Simple, robust and directly comparable across sectors.
Recommended approach: use several methods and converge on a range of value rather than a precise number. The illusory precision of a DCF to two decimal places is worthless if the underlying assumptions are uncertain.
Automated Valuation score across 800+ small caps
Screener Small Caps calculates the valuation multiples and compares them with the Euronext Growth universe to identify unjustified discounts.
There are four types of value: par (nominal issue value, symbolic), book (net assets per share), market (share price) and intrinsic (true economic value). The investor seeks to buy when the price is below the intrinsic value.
By the interaction of supply and demand on the market. The price reflects the collective opinion of participants at a given time and can drift significantly from fundamental value - especially on less liquid small caps.
The price is the market price at a given time. The value is the "fair" economic price based on fundamentals. These two notions often diverge. For the fundamental investor, it is this divergence that creates opportunities.
Book value / share = (Total assets − Total liabilities) / Number of shares. The P/B ratio compares the price to this value. A P/B < 1 with a positive ROE can indicate an interesting discount.
Yes. In a bankruptcy, if the sale of assets does not cover all liabilities, shareholders receive nothing. This is why analysing financial strength (debt, liquidity) is indispensable before any investment.