How To Use the Calculator
Enter the Current Share Price, Earnings Per Share (EPS), Expected future growth rate, and discount rate. Click the "Calculate" button. The output will show below. This includes the Intrinsic Value and the percentage Undervalued/Overvalued. That percentage is based on the difference between the current price and calculated intrinsic value.
Formula Explained
V = Intrinsic Value Per Share (Over Next 7-10 Years)
EPS = Current Normal Earnings Per Share
8.5 = P/E base for a No-Growth Company
g = Reasonable Annual 7-10 Year Growth Rate of EPS
4.4 = Average Yield of AAA Corporate Bonds in 1962 (Still Applicable)
Y = Current Yield on AAA Corporate Bonds
Warning
Make sure to invest with a strong margin of safety. Inputs need to be realistic and may prove to be inaccurate (Garbage In/Garbage Out).
Video Explanation