IVR: calculation, interpretation and limitations

What does IVR measure?

IVR is Ranking Invest's valuation index: estimated valuation divided by market capitalization. It is a relative measure for fundamental research, not a probability of profit or a guaranteed price target.

The current Brazilian calculation

The Brazilian valuation reference adds equity attributable to controlling shareholders to their cumulative earnings over the latest 16 quarters, then subtracts 10% of net debt. IVR divides that reference by market capitalization. Publication depends on data availability and quality checks.

Revenue, earnings and margin deviations and trend angles are separate indicators displayed in the ranking; they are not components of this formula. Do not automatically apply the Brazilian rules to US companies.

A worked example

Hypothetical example, in millions: equity of 100, cumulative earnings of 80 and net debt of 50 produce a reference of 175 (100 + 80 − 0.10 × 50). With market capitalization of 125, IVR equals 1.40.

Above 1, the calculated reference exceeds market capitalization; below 1, the reverse holds. High IVR can coexist with recent losses, substantial debt or deteriorating operations. Compare similar companies and inspect their filings.

Limitations

Short histories, restructuring, nonrecurring earnings, accounting changes and negative equity can limit interpretation. History describes the past. A missing value or a zero caused by a validation failure does not prove that a company has no value.