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Intrinsic Value Calculator
Calculate any stock's intrinsic value using three methods side by side — simplified DCF, Graham Number, and Earnings Power Value. Enter a ticker for instant results with upside/downside analysis and margin of safety.
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Enter fundamentals to see intrinsic value
Load a ticker for live data, or enter EPS, book value, and FCF manually. Three valuation methods calculate instantly.
How to use this intrinsic value calculator
Load a ticker or enter financials
Type any US-listed ticker and click Load to auto-fill EPS, book value per share, free cash flow, and current price. Or enter values manually from the company's latest 10-K or earnings release for non-US stocks.
Set growth and discount rate assumptions
The growth rate drives the simplified DCF model. Use 3-5 year historical FCF growth as your anchor, adjusted for sustainability. The discount rate is your required return — 8-10% for large-cap, 11-13% for riskier companies. Conservative inputs produce more reliable results.
Compare all three estimates
The calculator shows intrinsic value from DCF, Graham Number, and EPV side by side. When all three agree, conviction is high. When they diverge, the disagreement tells you which assumptions are driving the valuation — growth expectations vs current earning power vs asset value.
Check margin of safety
Each method shows upside or downside vs the current market price. Target stocks where at least two methods show 20%+ upside. The margin of safety protects against errors in your assumptions — the wider the better.
What is intrinsic value?
The concept
Intrinsic value is what a stock is actually worth based on its fundamentals — the cash it generates, the assets it owns, and the earnings it produces. It exists independently of what the market currently charges. When the market price is below intrinsic value, value investors see an opportunity. When it's above, they see risk.
The challenge is that intrinsic value is an estimate, not a fact. Every model requires assumptions about future growth, risk, and profitability. That's why using multiple methods and demanding a margin of safety matters — it protects against the inevitable errors in your assumptions.
Simplified DCF (Gordon Growth Model)
The simplified DCF uses the Gordon Growth Model: Intrinsic Value = FCF × (1 + g) / (r − g), where g is the expected long-term growth rate and r is the discount rate. It's the simplest form of discounted cash flow analysis — one year of free cash flow, growing at a constant rate forever.
Best for: mature, stable companies with predictable free cash flow. It breaks down when growth rate approaches or exceeds the discount rate, which produces infinite or negative values — a signal that the model's assumptions are too aggressive.
Graham Number
Benjamin Graham's formula: √(22.5 × EPS × Book Value Per Share). The 22.5 multiplier comes from Graham's criteria that a stock should trade below 15× earnings and below 1.5× book value (15 × 1.5 = 22.5). It produces a maximum price a defensive investor should pay.
Best for: asset-heavy industries like banking, industrials, and utilities where book value is meaningful. Less useful for software, services, and other asset-light businesses where most value is in intangibles that don't appear on the balance sheet.
Earnings Power Value (EPV)
EPV = EPS / Discount Rate. It capitalizes current normalized earnings at the required rate of return, assuming zero growth. If a company earns $6/share and your discount rate is 10%, the EPV is $60. It answers: what is the business worth if it never grows?
Best for: establishing a floor valuation. If the stock trades below EPV, you're getting the business for less than its current earning power — any future growth is free. The gap between EPV and the market price often reveals how much growth the market is pricing in.
Comparing the three valuation methods
When to use simplified DCF
The simplified DCF (Gordon Growth Model) works best for mature, stable companies with predictable free cash flow growth: consumer staples like Procter & Gamble, utilities like NextEra Energy, or established tech companies like Microsoft. The model assumes constant growth forever, so the growth rate must be realistic — typically 2-5% for mature businesses, roughly in line with nominal GDP growth.
Avoid using simplified DCF for companies with negative or highly volatile free cash flow, companies in turnaround situations, or high-growth businesses where a single growth rate doesn't capture the trajectory. For those, use the full multi-year DCF calculator which lets you model declining growth rates over time.
When to use the Graham Number
The Graham Number excels at screening for traditional value stocks — companies with real assets and positive earnings trading at conservative multiples. It works best for asset-heavy industries: banks, insurance companies, industrials, real estate, and utilities where book value reflects tangible, sellable assets.
The Graham Number will systematically undervalue asset-light companies — software, consulting, branded consumer goods — because their real value is in intangible assets (brand, IP, network effects) that don't appear on the balance sheet. A company like Visa has a book value that vastly understates its economic worth. If the Graham Number says a software company is overvalued, that tells you more about the model's limitations than the stock's valuation.
When to use Earnings Power Value
EPV is the most conservative of the three methods. By capitalizing current earnings at the discount rate with zero growth assumed, it establishes a floor valuation: what is the business worth if it never grows? This is powerful for mature, stable businesses where the question is not “will it grow?” but “is it trading below its current earning power?”
EPV is also useful for identifying how much growth is priced into a stock. If the market price is $120 and the EPV is $60, the market is pricing in a doubling of value from future growth. Is that realistic? If the DCF estimate is $130, the growth premium is justified. If the DCF is only $80, the market may be too optimistic about growth.
Using all three methods together
The real power of this calculator is comparison. When all three methods agree that a stock is undervalued, conviction is highest. When they disagree, the divergence itself contains information. A stock trading above its Graham Number and EPV but below its DCF value means the market is pricing in growth but the stock isn't cheap on an asset or current-earnings basis — you're making a growth bet.
The best opportunities are stocks trading below all three estimates — particularly below EPV, which requires no growth assumptions at all. If you're getting a business below the value of its current earnings with no growth required, the margin of safety is substantial. These situations are rare in efficient markets but do appear during sector-wide selloffs or individual company crises that are temporary.
Why intrinsic value is a range, not a number
Every valuation model requires assumptions — growth rates, discount rates, normalized earnings levels. Small changes in these inputs produce meaningfully different outputs. A stock might have an intrinsic value of $80 under conservative assumptions and $120 under optimistic ones. The honest answer isn't “intrinsic value is $100” — it's “intrinsic value is somewhere between $80 and $120.”
This is exactly why margin of safety matters. If the stock trades at $70, it's below even the conservative estimate — a strong buy signal. At $90, it's below the midpoint but above the conservative case — a reasonable position if you believe in the base case. At $115, you need the optimistic scenario to be right. The three methods in this calculator help you establish that range from multiple independent angles.
Limitations and blind spots
All three methods share a common limitation: they value the business based on historical or current financials, not future strategic optionality. A company sitting on a massive data asset, developing a potential blockbuster drug, or building a platform with network effects may be worth far more than any backward-looking model suggests. Intrinsic value models are most reliable for established businesses with stable economics.
Other blind spots: the simplified DCF breaks down when the growth rate approaches the discount rate (producing absurdly high values); the Graham Number ignores debt entirely; and EPV assumes current earnings are “normal,” which can be misleading for cyclical businesses at peak or trough earnings. Always ask: are the inputs to these models representative of the business's sustainable economics?
Frequently asked questions
What is intrinsic value?
Intrinsic value is an estimate of what a stock is actually worth based on its fundamentals — earnings, cash flows, and assets — independent of its current market price. If the intrinsic value is higher than the market price, the stock may be undervalued. If lower, it may be overvalued. Different valuation methods produce different estimates, which is why comparing multiple approaches gives a more complete picture.
How do you calculate the intrinsic value of a stock?
There are several methods: (1) Discounted Cash Flow (DCF) projects future free cash flows and discounts them to present value. (2) The Graham Number uses earnings per share and book value per share in the formula √(22.5 × EPS × BVPS). (3) Earnings Power Value divides normalized earnings by a discount rate. Each method makes different assumptions — using all three and comparing results gives a more reliable estimate than relying on any single approach.
What is the Graham Number?
The Graham Number is a valuation formula created by Benjamin Graham, the father of value investing. It calculates a maximum fair price as √(22.5 × EPS × Book Value Per Share). The 22.5 comes from Graham's criteria that a stock should have a P/E below 15 and a price-to-book below 1.5 (15 × 1.5 = 22.5). It works best for stable, asset-heavy companies and is less useful for high-growth or asset-light businesses.
What is a good margin of safety?
Benjamin Graham recommended buying at least 33% below intrinsic value. Most modern value investors target a 20–30% margin of safety. The required margin depends on your confidence in the estimates and the business quality — a stable utility might warrant a 15% margin, while a cyclical company with uncertain earnings might need 40% or more. The margin of safety protects against errors in your assumptions.
Which valuation method is most accurate?
No single method is universally most accurate. DCF is the most theoretically sound but is highly sensitive to growth and discount rate assumptions. The Graham Number is conservative and works well for value stocks but undervalues growth companies. Earnings Power Value captures normalized earning power but ignores growth entirely. The best approach is to use all three: if they agree, conviction is higher. If they diverge, investigate why — the disagreement itself is informative.
What is the difference between intrinsic value and market price?
Market price is what the stock trades at right now — determined by supply and demand, sentiment, and short-term flows. Intrinsic value is what the stock is worth based on fundamentals — earnings, cash flows, and assets. When market price is below intrinsic value, value investors see an opportunity (the stock is 'on sale'). When above, the stock may be overvalued. The gap between intrinsic value and market price is the margin of safety.
How often should I recalculate intrinsic value?
Recalculate after each quarterly earnings report, when the company provides updated guidance, or when material events occur (acquisitions, management changes, industry disruption). Intrinsic value changes slowly for stable businesses — a quarterly check is sufficient. For volatile or rapidly changing businesses, more frequent reassessment is warranted. The key inputs to watch are free cash flow, earnings per share, and book value per share.
Can intrinsic value be negative?
The Graham Number requires positive EPS and book value — it returns zero or undefined if either is negative. EPV requires positive earnings to produce a positive value. The simplified DCF can produce a negative result if the growth rate exceeds the discount rate (which means the model assumptions are unrealistic). A negative intrinsic value from any method usually indicates the model is inappropriate for that company — try a different valuation approach like EV/Revenue or asset liquidation value.
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