Why every intrinsic value calculator gives a different number

I pulled Apple's intrinsic value from four public tools on the same day. Same company. Same filings. Same share price of about $323.

Same company, same day, and the answers run from $163 to $319. That is a $156 spread on a single share. If you were hoping one of them is “the right one”, this table is the bad news. The good news is that the spread is explainable, and once you can explain it you can use it.

Every calculator does the same basic thing. It guesses how much cash the business will make in the future, then asks what that future cash is worth today. Three inputs do almost all the work.

1. The growth rate

How fast will earnings grow, and for how long? Change this one number a little and the answer moves a lot. For a business growing 10% a year, bumping the guess to 12% can lift the value by 20% or more. Some sites use analyst forecasts (what Wall Street expects next year). Some use the company's own past record. Some let you type whatever you want.

This is where most of the $156 spread lives. Simply Wall St's number leans on analyst forecasts, which are high for Apple right now. Ours leans on the last ten years of reported results and caps growth at 15% no matter what, which is why it lands lowest.

2. The discount rate

This is the return you demand for waiting and for taking the risk. A 10% discount rate says “I need 10% a year to bother.” An 8% rate says you are more patient, and it makes every future dollar worth more today, so the value goes up. Two sites using 8% and 11% on the same cash flows will disagree by roughly a third.

3. What counts as “earnings”

Free cash flow, owner earnings, net income, or revenue times a multiple. They are cousins, not twins. For a company with heavy buybacks, big capital spending, or lumpy working capital, the four can differ by a wide margin. Alpha Spread blends a cash-flow model with a multiples model. GuruFocus uses its own historical-multiple method. We use owner earnings with a growth cap.

None of those choices is wrong. They are different questions. “What is this worth if the analysts are right?” is not the same question as “What is this worth if the next ten years look like the last ten?”

No. The math inside every one of them is correct, and it is not hard. Discounting cash flows is the same arithmetic whether a website does it or you do it on a napkin. The top Reddit answer on this is right: garbage in, garbage out.

But that answer stops one step short. It says the inputs matter and then leaves you alone with five different numbers. The next step is learning which inputs each site chose, so you can tell which question each number answers.

Five checks. They take about two minutes per site.

1. Find the growth rate it used. If you cannot find it, treat the number as a black box. If it is above the company's own ten-year record, the number is optimistic.
2. Find the discount rate. Anything under 8% is generous. Anything over 12% is strict. Most careful investors sit at 9% to 11%.
3. Find out what it calls earnings. Free cash flow and owner earnings are the conservative choices. Revenue-based multiples are the loosest.
4. Ask how long it projects. Five years is honest. Twenty years is theater. Beyond five years nobody knows, and a long terminal value is where the biggest guesses hide.
5. Ask whether it checks quality first. A cash-flow model on a shrinking business gives a precise number for a company you should not own at any price. Quality is a gate, not an input.

Run those five on the table above and the spread stops being mysterious. Analyst growth, a low-ish discount rate, and a narrative model land you near today's price. Ten-year history, a 15% cap, and owner earnings land you far below it. Both are honest. They just believe different things about the next decade.

Because it is built to be. The Wonderfolio fair value uses the company's proven track record (the last ten years of reported results) instead of analyst predictions, caps growth at 15% a year even for a business growing faster, and starts from owner earnings rather than revenue or net income. That combination will always give a lower number than a forecast-driven model on a company like Apple.

That is not a claim that ours is the true value. It is a claim about what the number is for. A conservative fair value is meant to set a buy-below price you can be wrong about and still be fine. The app then turns that fair value into buy, watch, and sell zones and flags when a price crosses into one. The decision is always yours.

If you want to see the mechanics, the intrinsic value guide walks through the owner-earnings method and the DCF for beginners guide shows the arithmetic with a worked example. You can run both by hand with the free calculators.

Stop looking for the one right number. Look for the range, then place your buy price below the bottom of it.

• If four honest tools all land within 15% of each other, the estimate is fairly solid, and a 25% to 40% margin of safety is reasonable for a stable business.
• If they spread out the way Apple's do here, the future is genuinely uncertain, and the margin of safety you demand should grow with that uncertainty. 50% is a common default.
• If a business fails a quality check, the range does not matter. Cheap and worth owning are different things.

The disagreement between calculators is telling you how confident to be. Read it that way and the tools stop being “kinda sus” and start being useful.

For a side-by-side of the tools themselves, see value investing apps compared. For the next step, turning a range into a price you will wait for, see how to know what price to pay for a stock.