Intrinsic Value Calculator

The most common method is a Discounted Cash Flow (DCF) analysis. You project the company's future free cash flows, then discount them back to present value using an appropriate discount rate (usually WACC). The sum of all discounted cash flows plus the terminal value gives you the intrinsic value per share. Another popular method is the Benjamin Graham formula, which uses EPS and expected growth rate. Our calculator supports both methods.

Warren Buffett primarily uses a DCF model focused on "owner earnings" — net income plus depreciation minus capital expenditures. He applies a discount rate based on the long-term US Treasury yield and looks for companies trading at a significant margin of safety below their calculated intrinsic value. Buffett also emphasizes qualitative factors like competitive moats, management quality, and business predictability that can't be captured in a formula alone.

Benjamin Graham recommended a margin of safety of at least 33%. Warren Buffett typically looks for 25-50% depending on the quality and predictability of the business. For high-quality companies with predictable cash flows (like Coca-Cola or Visa), a 25% margin might suffice. For cyclical or speculative businesses, you'd want 40-50% or more. The margin of safety is your protection against errors in your assumptions.

Market price is what investors are currently willing to pay for a stock — driven by supply, demand, and sentiment. Intrinsic value is an estimate of what the stock is actually worth based on the company's fundamentals (cash flows, earnings, assets). When market price is below intrinsic value, the stock may be undervalued — this is when value investors buy. When market price exceeds intrinsic value, the stock may be overvalued.

No intrinsic value calculator is perfectly accurate because all valuations depend on assumptions about future growth, discount rates, and terminal values. A 1% change in growth rate can shift the intrinsic value by 15-25%. The value of a DCF model isn't the precise number — it's the framework for thinking about what drives a stock's worth. Always use a margin of safety and consider multiple valuation methods. Our pre-loaded data uses AI to generate reasonable base-case assumptions.