Intrinsic Value Calculator

How this intrinsic value calculator works

Most valuation tools hide their assumptions behind a black box and hand you a single number. This one does the opposite: every input is yours, nothing is downloaded from a data provider, and the arithmetic is spelled out below so you can check it by hand.

The model is a reverse discounted cash flow with an exit multiple. Instead of asking "what return will I get at today's price?", it asks the more useful question: what is the highest price I can pay today and still earn exactly the return I demand? Everything above that price destroys your target return; everything below it gives you a margin of safety.

The four steps behind the number

1. Project earnings per share. Either compound today's EPS at an average growth rate, or type a figure for each year if you have analyst estimates or your own model. Year-by-year mode is the honest choice for cyclical businesses.
2. Put a multiple on the final year. The terminal P/E converts the last projected EPS into an exit price: Pterminal = EPSX × P/Eterminal This single assumption usually drives more of the result than growth does.
3. Add the dividends. The trailing dividend yield you enter is converted into a payout ratio against current EPS and held constant, so dividends grow alongside earnings. Leave the reinvestment switch on and each dividend compounds at your required rate until the end of the horizon.
4. Discount everything back. The exit price and the dividend stream are brought back to today at your required return. The result is the fair value: the entry price consistent with that return. Pfair = (EPSX × P/Eterminal) / (1+r)X  +  Σ Dt / (1+r)t

Reading the output

• Fair value today — the maximum price that still delivers your target return.
• Margin of safety — how far below fair value the market price sits. Positive is the cushion that protects you when your assumptions turn out to be optimistic.
• Return at current price — the annualised IRR you would actually earn buying at today's quoted price instead of at fair value.
• Total return over the period — the cumulative, not annualised, gain across the whole horizon, dividends included.

What it deliberately does not do

The model ignores share buybacks and dilution beyond what your EPS path already implies, it assumes a single flat discount rate, and it has no opinion on whether your growth rate or exit multiple is realistic. Garbage in, garbage out applies with full force: the value of the exercise is in stress-testing your own assumptions, not in the precision of the output.

Frequently asked questions

What is the intrinsic value of a stock?

Intrinsic value is what a share is worth to you based on the cash it will produce, rather than what the market happens to be quoting today. This calculator defines it precisely: the highest price you can pay now and still earn exactly the annual return you require over your chosen holding period.

Is this a discounted cash flow (DCF) calculator?

Yes — a reverse DCF with an exit multiple. Rather than forecasting free cash flow to perpetuity and arguing about a terminal growth rate, it values the share as the discounted exit price plus the discounted dividend stream. That needs fewer assumptions, and it makes every one of them visible on screen.

What terminal P/E ratio should I use?

Anchor it to something you can defend: the company's own long-run average multiple, the multiple of a mature competitor, or a reasoned view of what the business looks like once growth normalises. A company trading at 45× today will almost certainly de-rate as it matures, and assuming otherwise is a forecast about the market rather than the business. The full valuation guide works through a complete example.

What is a good margin of safety?

It scales with your confidence: roughly 15–20% for a stable, predictable business you understand well, 25–35% for a good company with some cyclicality, and 40–50% for turnarounds, high growth or a sector you are new to. Margin of safety and sensitivity testing explains how to size it and how to stress-test each input.

Is the calculator free?

Yes. No account, no sign-up, no limits, and nothing you type is stored or sent anywhere beyond the request that computes your result.