Intrinsic Value Calculator

Intrinsic Value Calculator

Investing wisely means knowing whether a stock is undervalued, fairly priced, or overvalued. Market prices can swing dramatically due to speculation and sentiment, but the intrinsic value reveals the real worth of a company’s stock based on fundamentals.

Our Intrinsic Value Calculator uses Benjamin Graham’s approach to estimate a stock’s fair value. By factoring in Earnings per Share (EPS), Expected Growth Rate, Corporate Bond Yield, and Current Market Price, the calculator also provides the Margin of Safety (%), helping investors determine whether a stock is safe to buy.

🔎 What is Intrinsic Value?

Intrinsic value is the fundamental worth of a stock, calculated from profitability, growth expectations, and prevailing bond yields. Comparing intrinsic value to the current market price gives a clear signal:
If Intrinsic Value > Market Price → Stock is undervalued.
If Intrinsic Value ≈ Market Price → Stock is fairly valued.
If Intrinsic Value < Market Price → Stock is overvalued.

The Margin of Safety (%) shows how much “buffer” exists between intrinsic value and current price, reducing investment risk.

👉 Formula for Intrinsic Value

Where:
EPS = Earnings per Share
g = Expected Annual Growth Rate (%)
Y = Corporate Bond Yield (%)
This formula adjusts the value of a stock by combining its earnings, expected growth, and the prevailing bond yield (risk-free rate).

And the Margin of Safety (%) formula is:

📚 Examples of Intrinsic Value

Example 1

EPS: $12
Expected Growth Rate: 8%
Corporate Bond Yield: 5%
Current Market Price: $100

✅ Intrinsic Value = $258.72
✅ Margin of Safety = 61.35%
This stock is undervalued with a high safety margin, making it attractive for value investors.

Example 2

EPS: $20
Expected Growth Rate: 10%
Corporate Bond Yield: 6%
Current Market Price: $320

✅ Intrinsic Value = $418.00
✅ Margin of Safety = 23.44%
This stock is slightly undervalued, with a reasonable margin of safety for cautious investors.

Example 3

EPS: $8
Expected Growth Rate: 6%
Corporate Bond Yield: 5.5%
Current Market Price: $450

✅ Intrinsic Value = $131.20
✅ Margin of Safety = −242.99%
This stock is heavily overvalued, carrying significant downside risk.

✨ Features of Our Intrinsic Value Calculator

💡 Why This Matters for Investors

Avoid Overpaying: Ensures you never buy above fair value.
Reduce Risk: The Margin of Safety acts as a protection buffer.
Focus on Fundamentals: Moves attention away from market hype.
Build Long-Term Wealth: Encourages disciplined, value-driven investing.