How MeritValue values a company
MeritValue reads each company’s financial statements straight from its SEC filings, runs them through a deterministic, version-controlled valuation engine every night, and shows every figure with a link to the filing line it came from. Same inputs, same answer — and every change to the method gets a new version number.
Source: SEC EDGAR XBRL company facts — the machine-readable numbers inside every annual report (10-K, 20-F, 40-F). We take annual figures only: revenue, net income, operating cash flow, capital expenditure, debt, cash, equity and diluted shares, plus the REIT concepts (depreciation, impairments, property-sale gains).
Each figure keeps its provenance: CIK, accession number, XBRL tag, unit, period and form. Where a company switched tags over the years, the tag priority applies per period, so no year is dropped. Where a filing restates an earlier year, the latest filing wins and is the one cited. Free cash flow is derived (operating cash flow − capex) and cites both of its parents.
The pipeline runs nightly after 08:30 UTC. No number on the site is typed in by hand, and there are no market prices: MeritValue has no market-data licence, so the price is always yours to enter.
WACC is built in the open, and every input is listed under each model on a company page: the risk-free rate is the US 10-year Treasury yield (treasury.gov daily yield curve); the equity risk premium is 5%, following Damodaran’s implied ERP; cost of debt is the risk-free rate plus a 1.5% spread, after a 21% tax rate.
Two inputs are fixed until a market-data source exists, and the page says so: beta is 1.00 and the equity share of capital is 85%.
DCF · Growth Exit 10Y
Starts from the median of the last three fiscal years' free cash flow (operating cash flow minus capital expenditure), so one odd year can't hijack the estimate. Grows it for 10 (or 5) years at the company's own historical FCF growth — the median of its earliest three years against its latest three, clamped to 0–20% — or at a 5% default, flagged on the page, when that history is too short or not positive. Then a terminal value at 2.5% growth, everything discounted at the company's WACC, net debt subtracted, divided by diluted shares.
Refuses on: fewer than three years of free cash flow — banks, for example, file no capital-expenditure line; a non-positive three-year median free cash flow (see the EPV instead); no diluted share count; a discount rate at or below terminal growth; a negative equity value after net debt; REITs — the FFO model applies instead.
Earnings Power Value
Normalised earnings (median of the last five fiscal years' net income) divided by the cost of equity, per share. No growth is assumed: it is the value of the business if it simply kept earning what it earns.
Refuses on: fewer than three years of net income, or a non-positive five-year median; no diluted share count; investment companies (BDCs, RICs) and REITs.
Graham Number
√(22.5 × EPS × book value per share). 22.5 is Graham's maximum P/E of 15 times maximum P/B of 1.5 (The Intelligent Investor, ch. 14): the most a defensive investor should pay, not a target.
Refuses on: non-positive diluted EPS or book value per share; investment companies (BDCs, RICs) and REITs.
FFO · Capitalized
NAREIT funds from operations: net income + depreciation & amortisation + real-estate impairments − gains on property sales, as tagged in the filing. The three-year median is capitalised at the cost of equity. Used for REITs, where depreciation distorts every earnings-based model.
Refuses on: anything that isn't a REIT (SIC 6798), and investment companies; fewer than three fiscal years where FFO can be built, or a non-positive three-year median.
Reverse DCF 5Y
The 5-year DCF run backwards: you type a price on a company page, and it solves for the FCF growth rate that price implies. It appears on every company with a positive free-cash-flow base.
Refuses on: no positive three-year median FCF or share count; a price implying more than 100% a year growth, or a stream shrinking faster than 50% a year.
The lessons go deeper: the DCF · every lesson →
A model that doesn’t fit a business says not applicable and gives its reason, instead of printing a confident wrong number. Each model’s refusal rules are listed under it above; the reason for a specific company is printed on its page, beside the model.
- Beta and the equity weight are fixed (above), so the discount rate doesn’t yet reflect a company’s own risk or leverage.
- Debt is the sum of the debt tags a company files. Where a filer reports a total alongside its parts, the sum can count the same debt twice. Every component is footnoted on the company page so you can check it.
- Annual figures only. A company with sparse XBRL data gets a lower completeness score, and any model missing an input it needs refuses.
| v0.1.0 | DCF 5Y/10Y, reverse DCF, Graham Number, equity EPV, P/E reversion. |
| v0.2.0 | Adds quality signals (return on capital vs cost of capital, share-count change) and implied return. No earlier output moved. |
| v0.3.0 | Investment companies (BDC/RIC) refused on every earnings-capitalisation model; book value per share moves to period-end shares. |
| v0.4.0 | REITs (SIC 6798) refused on all four general models until a REIT model exists. |
| v0.5.0 | FFO capitalisation — the REIT model. REIT pages value again; the general models still refuse them and name the model that applies. |
Every stored valuation carries the engine version that computed it; the company page shows it beside the values.