Free Intrinsic Value Calculator
Estimate the true worth of a stock using the legendary Benjamin Graham formula. This free online tool helps you find undervalued companies by calculating their intrinsic value with a revised, modern approach. Learn more below.
How to Use This Calculator
Why Intrinsic Value Matters
Intrinsic value is the actual worth of a company, independent of its current stock price. Note that price is what you pay, value is what you get. By knowing the intrinsic value, you can determine if a stock is trading at a discount (margin of safety) or a premium.
The Modern Graham Formula
V = (EPS × (8.5 + 1g) × 4.4 (adjust with actual value of bond yields)) / Y
Benjamin Graham originally proposed a multiplier of 2g (2 × Growth Rate). However, in today's mature market environment, we use 1g to be more conservative and realistic. This adjustment helps avoid overvaluing high-growth stocks.
Formula Inputs
| Input | Description |
|---|---|
| EPS | Earnings Per Share (Trailing 12 Months). |
| Growth (g) | Expected annual growth rate (%) for the next 7-10 years. |
| Bond Yield (Y) | Current yield on AAA corporate bonds (default 4.4%). |
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Graham Intrinsic Value FAQ
- The Benjamin Graham formula calculator is a tool used by value investors to estimate the intrinsic value of a growth stock. It is based on the formula: V = EPS × (8.5 + 2g), where 'g' is the growth rate. However, modern revisions often adjust the formula to reflect current interest rates.
- The classic Graham formula is V = EPS × (8.5 + 2g) × 4.4 / Y, where V is value, EPS is earnings per share, 8.5 is the P/E base for a no-growth company, g is the growth rate, 4.4 is the average yield of AAA corporate bonds in 1962, and Y is the current yield on AAA corporate bonds.
- Yes, but with modifications. Graham himself revised his formula over time. The modern version often uses a stricter growth multiplier (1g instead of 2g) to be more conservative, reflecting the lower-growth reality of many mature companies today.
- A good intrinsic value is one that is significantly higher than the current market price of the stock, offering a 'margin of safety'. Graham recommended buying stocks when they are trading at least 30% below their calculated intrinsic value.
- To be more conservative. The original 2g multiplier was quite aggressive for high-growth estimates. Reducing it to 1g aligns better with modern value investing principles, prioritizing safety and realistic growth expectations.