Three-Element Value Investing Valuation Framework

What It Solves

When a user asks whether a company is cheap, the usual answer can swing between a story-driven DCF and a quick PB or PE screen. This skill forces a more disciplined decomposition: value the asset base first, test whether earning power is durable, and only then consider whether growth deserves a premium. It is designed for conservative valuation diagnosis, not for producing optimistic buy arguments.

How It Works

Given a company name or ticker, the skill follows a fixed workflow:
- Asset value A: starts from a going-concern or liquidation premise, then applies conservative adjustments to cash, receivables, inventory, fixed assets, liabilities, and off-balance-sheet obligations, ending with adjusted book value per share.
- Earning power value B / EPV: normalizes 5–10 years of results, removes one-time items, replaces accounting depreciation with maintenance capex, and applies a conservative discount rate, usually 10%–12%.
- Growth value G: entered only when A < B; instead of forcing a long-dated DCF, it checks cash-flow returns, organic growth drivers, and the historical return on retained earnings.
- Margin of safety and strike zone: defaults to Min(A, B) × (1 - margin), and can also report attention levels such as a 30% discount to asset value or a 50% discount as an ideal entry point.

The structured JSON output can then be rendered into an email-friendly HTML report for review or forwarding.

Boundaries

The skill is conservative by design: it should not lower cost of capital or raise growth assumptions just to make a company look cheap. In recession, liquidation, or data-scarce cases, the framework should fall back to asset or liquidation logic, or present conservative ranges. Email sending is an external action and should only happen when explicitly requested.