Finance & Investment · Returns
Stock Intrinsic Value Calculator
Estimate what a share is worth with four classic methods — a two-stage discounted cash flow, the Gordon dividend discount model, the Graham number, or future earnings at a fair P/E — and compare it with the market price for a margin of safety, with a sensitivity table for your assumptions.
Your inputs
Quick start — try a typical case
₹ 1.2 thousand
Operating cash flow minus capital expenditure, divided by shares outstanding.
For dividends (DDM) this is the long-run growth forever, so keep it modest.
Long-run growth, around nominal GDP growth or lower.
The return you demand for this stock's risk — often 11–14 % for Indian equities.
Your result Live
Intrinsic Value per Share — Discounted cash flow (DCF)
₹1,250
4.0% margin of safety at ₹1,200
- Margin of Safety
- 4.0%
- Upside to Intrinsic Value
- 4.2%
- Value from High-growth Years
- ₹500
- Value from Terminal Period
- ₹750 (60% of the total)
Sensitivity: value per share by required return and terminal growth
3 rowsValuations are only as good as their assumptions — small changes to growth or the required return move the answer a lot (see the sensitivity table). Use several methods and a margin of safety.
This is an educational estimate, not a recommendation to buy or sell any security.
An estimate from the assumptions you entered, not a guaranteed outcome.
How this is calculated
DCF = Σ FCFₜ/(1+k)ᵗ + [FCFₙ(1+g_T)/(k−g_T)]/(1+k)ⁿ · DDM = D₀(1+g)/(k−g) · Graham = √(22.5·EPS·BVPS) · P/E = EPS(1+g)ⁿ·PE/(1+k)ⁿ
- k
- Required return (discount rate)
- g, g_T
- Growth in the high-growth years, and terminal growth forever after
- 22.5
- Graham's limit of 15× earnings × 1.5× book value
A share is worth the cash it will generate for its owners, discounted to today at the return you require. DCF projects free cash flow; the dividend discount model values a steady dividend payer; the Graham number caps what a defensive investor should pay given earnings and book value; the P/E method values future earnings at a sensible multiple. The margin of safety is how far the price sits below your estimate.
Assumptions & sources
- Per-share figures; constant growth within each stage.
- DCF and DDM need growth below the required return in the long run.
- No adjustment for net cash/debt beyond what free cash flow per share already reflects.
- 1CFA Program Curriculum — Quantitative Methods: The Time Value of Money — CFA Institute
- 2Investments (Bodie, Kane & Marcus), chapters on returns, compounding and the time value of money — McGraw-Hill
- 3The Intelligent Investor (Graham), chapter 14 — stock selection for the defensive investor — Harper
Calculator ID FIN-EQ-VALUE-001 · version 1.0.0
Common questions
Which valuation method should I use?
DCF for most businesses with predictable cash flow; DDM for steady dividend payers like utilities; the Graham number as a conservative cross-check for profitable, asset-backed companies; P/E for quick comparisons. Agreement across methods builds confidence.
What margin of safety is enough?
Value investors often look for 20–30 % or more, to allow for errors in the estimate.
Why does the terminal value dominate a DCF?
Cash flows after the high-growth years go on forever, so they usually make up most of the value — which is why the terminal growth and discount rate matter so much.