The intrinsic value (IV) of a potential investment is arrived at by comparing the results of the Net Asset Value (NAV) and Earnings Power Value (EPV) analyses.
If EPV is less than NAV then the intrinsic value for the company is derived from EPV and adds value for the probability of a catalyst taking place within the company that would bring the value of the company to its competitive state (NAV).
If EPV is equal to NAV then it would seem that the company being studied has no competitive advantage. Therefore, EPV and NAV would define the intrinsic value.
If EPV is greater than NAV then the company has what is referred to as a "franchise value". To be willing to pay for this franchise value, the investor must deem it to be sustainable. In this case the intrinsic value is derived from NAV plus added value for the probability of the company maintaining its franchise.