Intrinsic value calculator
Two numbers tell you what a stock is worth and what to pay for it. Intrinsic value comes from a discounted cash flow on the cash the business generates; fair valueturns its earnings into a per-share price, and half of fair value is your margin-of-safety buy price. Enter a company's numbers in both calculators below, then read how each method works so the output is judgment, not a black box.
New to the approach? Start with the complete guide to value investing for beginners.
Intrinsic Value (DCF)
What the business is worth from the cash it generates — a discounted cash flow on owner earnings, discounted at 15% over 10 years.
Discounted owner earnings over 10 years plus a terminal value of year-10 earnings × 15.
Fair Value (earnings)
What a share should sell for — projected earnings times a future multiple, discounted back at 15%. Half of Fair Value is your margin-of-safety buy price.
What a share should sell for today at your required return.
Fair Value less your margin of safety — your buy-below price.
Show the math
- Future EPS = $5.00 × (1 + 12%)10 = $15.53
- Future price = future EPS × 20 = $310.58
- Fair value = future price ÷ (1 + 15%)10 = $76.77
- Buy price = fair value × (1 − 50%) = $38.39
Estimates only, on assumptions you choose. Each method is one lens — cross-check them against each other before trusting any range.
Intrinsic value vs fair value
The two calculators above answer two different questions, and it pays to keep them straight. Intrinsic value measures the cash the business itself throws off — a discounted cash flow on owner earnings. Fair valueturns projected earnings into a per-share price the market should pay. The first asks “what is this business worth?”; the second asks “what should a share sell for?” Looked at together, they triangulate.
How the intrinsic value (DCF) calculation works
Intrinsic value comes from a discounted cash flow on owner earnings — operating cash flow minus the upkeep spending needed to stay in business, per share. Three steps:
- Project owner earnings.Grow owner earnings per share forward ten years at a conservative rate drawn from the company's own history.
- Discount each year back. Bring every year's owner earnings to present value at 15% — the minimum annual return you require for tying up your money.
- Add a terminal value. Value the business beyond year ten at roughly fifteen times its year-ten owner earnings, discounted back to today. Sum the parts and you have intrinsic value per share.
How the fair value (earnings) calculation works
Fair value works from earnings instead of cash flow. Take current EPS, grow it ten years at a conservative rate, apply a reasonable future price-to-earnings multiple to get a plausible future price, then discount that price back to today at 15%. The result is what a share should sell for now.
Cut fair value by a steep margin of safety — 50% is the convention — and you get your buy-below price. Buying at half of what a share is worth means even a flawed estimate leaves room to be wrong.
Every input traces to the company's published financials or a return you choose deliberately. Nothing depends on market mood or anyone's prediction — that is what separates a valuation from a guess. And anchoring growth to a decade of evidence matters most: reading the quality scorecard comes before valuing anything, because a high price can be debated but a weak business can't.
Frequently asked questions
How do you calculate the intrinsic value of a stock?
Intrinsic value is a discounted cash flow on owner earnings — the cash the business actually generates. Project owner earnings per share (operating cash flow minus maintenance capex, per share) forward about ten years at a conservative growth rate, discount each year back to today at the minimum annual return you require (15% is common), and add a discounted terminal value for the years beyond. The sum is what the business is worth today.
What is the difference between intrinsic value and fair value?
Intrinsic value measures the cash a business throws off, using a discounted cash flow on owner earnings — it answers 'what is this business worth?' Fair value works from earnings instead: it grows EPS forward, applies a future price-to-earnings multiple, and discounts back to today — it answers 'what should a share sell for?' They're complementary; when both land in a similar range you can trust it more.
What is a margin of safety price?
The margin-of-safety price is fair value with a steep discount applied — often 50%. Buying at half of what a share is conservatively worth means even a flawed estimate leaves room to be wrong. Benjamin Graham called margin of safety the three most important words in investing.
What growth rate should I use in an intrinsic value calculation?
Use a conservative rate grounded in the company's own ten-year history of earnings, equity, and cash-flow growth — not a hopeful number. When the company's history and analyst estimates disagree, lean toward the lower, evidence-based figure. Garbage in, garbage out: the estimate is only as honest as the growth assumption.
Is intrinsic value the same as the stock price?
No. Price is what the market quotes today; intrinsic value is an estimate of what the business itself is worth based on its fundamentals. The whole point of value investing is to buy when price sits well below intrinsic value — and to ignore the quote when it doesn't.
Is one valuation method enough?
No. The two methods here — a cash-flow DCF and an earnings-based estimate — are complementary lenses, and asset-based methods starting from book value are a third. When independent methods land close together you can trust the range; when they diverge, that disagreement is itself information worth investigating.
Skip the spreadsheet
Wonderfolio computes intrinsic value four ways — earnings, asset, and cash-flow based — for every company, continuously, on iPhone, iPad, and Mac. You bring the judgment.
Get startedWonderfolio is an educational research tool. This calculator applies publicly known value-investing formulas to numbers you enter; its output is an estimate, not personalized investment advice or a recommendation to buy or sell any security.