💰 Intrinsic Value: $6.8B
DCF valuation based on Owner Earnings growing at -12.33% annually
📈 Expected Return: -23.60%
Projected annual return if stock converges to fair value over 5 years
Where BAX Falls on the Value Scale
BAX is currently trading at -99.00% above intrinsic value
What is Margin of Safety?
"The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price."- Benjamin Graham, The Intelligent Investor
Margin of Safety is a fundamental concept in value investing, introduced by Benjamin Graham and embraced by Warren Buffett. It represents the difference between a stock's intrinsic value and its market price, expressed as a percentage. This "cushion" protects investors from errors in analysis, unforeseen events, and market volatility.
How We Calculate Margin of Safety
Margin of Safety = ((Intrinsic Value - Market Cap) / Intrinsic Value) × 100
For BAX:
MoS = (($6.8B - $13.5B) / $6.8B) × 100
MoS = -99.00%
A positive margin of safety means the stock is trading below its intrinsic value - you're potentially buying dollars for less than a dollar. A negative margin of safety means you're paying a premium.
Why 30% is the Magic Number
Benjamin Graham famously recommended a margin of safety of at least 30% before buying. This buffer accounts for:
- Estimation errors: Intrinsic value calculations involve assumptions that may be wrong
- Unforeseen events: Economic downturns, competitive threats, management issues
- Market volatility: Prices can fall further before recovering
- Opportunity cost: Capital tied up in fairly-valued stocks can't buy bargains
Deeply Overvalued Zone
BAX's -99.00% margin of safety suggests: Significant premium to intrinsic value — high risk of permanent capital loss
"Price is what you pay, value is what you get."- Warren Buffett
Important Considerations
Margin of safety is just one factor in investment decisions. Before acting on this signal, consider:
- Quality of the business: High ROIC, durable competitive advantages, honest management
- Growth trajectory: Is Owner Earnings growing or declining?
- Balance sheet strength: Debt levels, interest coverage, liquidity
- Industry dynamics: Secular headwinds or tailwinds
- Your own analysis: Never rely solely on any single metric or tool
🔗 Understanding the Calculation
Margin of Safety is derived directly from Intrinsic Value. Here's how we calculate BAX's margin of safety step by step:
Want to understand how we calculate the intrinsic value of $6.8B?
View DCF Methodology & Calculation →Our DCF model uses Owner Earnings (Warren Buffett's preferred cash flow metric), a 10% discount rate (Buffett's hurdle rate), and a data-driven growth rate calculated via log-linear regression on historical data. See the full methodology on our Intrinsic Value page.
🔗 The Valuation Trilogy
Margin of Safety is the second piece of Zyberno's valuation framework, connecting Intrinsic Value to Expected Return:
Higher intrinsic value + higher margin of safety = higher expected return
📊 Full BAX Stock Report →
See complete financial analysis with 250+ metrics.
💰 BAX Intrinsic Value →
Detailed DCF methodology and how we calculate fair value.
📈 BAX Expected Return →
Projected annual return if stock converges to intrinsic value.
👤 BAX Owner Earnings →
The cash flow metric that powers our DCF valuation.
🔁 BAX ROIC →
Return on Invested Capital - business quality metric.
💵 BAX Free Cash Flow →
Cash generation after capital expenditures.
🪙 BAX EPS →
Earnings Per Share history and growth trends.
☷ BAX Brina Gap →
Fundamental growth vs. what the market price is implicitly assuming.
📏 BAX Momentum →
12-1 price momentum and 52-week-high position - market context, not valuation.
Summary: BAX Valuation Status
According to Zyberno's DCF model, BAXTER INTERNATIONAL INC. (BAX) has a negative Margin of Safety of -99.0% — an avoid signal, trading significantly above Zyberno's estimated intrinsic value per share of $13.13.
BAXTER INTERNATIONAL INC. is currently trading at $26.13 per share compared to Zyberno's estimated intrinsic value of $13.13. This represents a margin of safety of -99.00% — valuation status: DEEPLY OVERVALUED.
Significant premium to intrinsic value — high risk of permanent capital loss. This translates to an expected annual return of -23.60% if the stock converges to fair value. For complete analysis including business quality metrics, profitability ratios, and balance sheet strength, view the full BAX stock report. To understand how Zyberno calculates intrinsic value, see the BAX intrinsic value analysis.
Zyberno's margin of safety is the direct output of the model — the percentage gap between intrinsic value and the current price. The number is not smoothed toward analyst targets or market sentiment. A margin of safety of +40% means the model values the business 40% above what the market is currently pricing in.
Frequently Asked Questions
What is BAX's margin of safety?
BAXTER INTERNATIONAL INC.'s margin of safety is -99.00%. This represents the percentage difference between our calculated intrinsic value ($6.8B) and the current market cap ($13.5B).
Should I buy BAX stock now?
BAX appears overvalued. The current price exceeds our intrinsic value estimate. Value investors would typically wait for a better entry point.
What is a good margin of safety for stocks?
Benjamin Graham, the father of value investing, recommended a margin of safety of at least 30%% before buying a stock. This cushion protects against estimation errors, unforeseen events, and market volatility. Higher quality businesses may warrant smaller margins, while riskier businesses require larger ones.
How is margin of safety calculated?
Margin of Safety = ((Intrinsic Value - Market Cap) / Intrinsic Value) × 100. A positive value means the stock trades below intrinsic value; negative means it trades above.
Is BAX undervalued or overvalued?
BAX appears overvalued with a negative margin of safety of -99.00%.