Intrinsic Value Calculator
Created by: James Porter
Last updated:
Enter current earnings or free cash flow per share, growth assumptions, and your discount rate to see intrinsic value per share, margin of safety, and a growth × discount rate sensitivity table.
Intrinsic Value Calculator
FinanceEstimate intrinsic value per share with a simplified two-stage DCF model, and see margin of safety versus the current price plus a growth × discount rate sensitivity table.
Growth rate during the high-growth phase
Sustainable long-run growth rate, typically 2–3%
Your required rate of return
What Is an Intrinsic Value Calculator?
An intrinsic value calculator estimates what a stock is actually worth based on the present value of its future cash flows, rather than its current trading price.
Using a simplified two-stage discounted cash flow (DCF) model, it projects a high-growth phase followed by a terminal phase of sustainable long-run growth, then discounts everything back to today's dollars using your required rate of return.
This approach is the foundation of value investing: compare the calculated intrinsic value to the current market price, and the percentage difference — the margin of safety — tells you whether the stock looks cheap, fairly priced, or expensive relative to your own growth and discount rate assumptions.
Because DCF outputs are sensitive to small input changes, this calculator also produces a sensitivity table across a range of growth and discount rates.
How the Two-Stage DCF Model Works
Stage one projects your base earnings or free cash flow per share forward at the high-growth rate for the number of high-growth years you specify, discounting each year's cash flow back to present value.
Stage two applies the Gordon Growth Model to the cash flow in the year after the high-growth phase ends, using the terminal growth rate, to estimate a terminal value — which is then discounted back to present value as well.
Intrinsic value per share is the sum of all discounted stage-one cash flows plus the discounted terminal value.
Two-Stage DCF Formulas
Year N cash flow = base value × (1 + growth rate)^N
PV of year N cash flow = year N cash flow / (1 + discount rate)^N
Terminal value = (final-year cash flow × (1 + terminal growth)) / (discount rate − terminal growth)
PV of terminal value = terminal value / (1 + discount rate)^high-growth years
Intrinsic value per share = sum of PV cash flows + PV of terminal value
Margin of safety % = (intrinsic value − current price) / intrinsic value × 100
Example Scenarios
Steady Growth Industrial Company
Base FCF per share: $4.00. High-growth rate: 10% for 5 years. Terminal growth: 2.5%. Discount rate: 9%. Year-5 cash flow grows to $6.44, with cumulative discounted cash flows totaling roughly $19.30. Terminal value discounts back to approximately $35.10 per share. Intrinsic value per share: about $54.40. At a current price of $42, margin of safety is roughly 23% — suggesting meaningful undervaluation under these assumptions.
High-Growth Tech Name with Tight Margin
Base FCF per share: $1.50. High-growth rate: 18% for 5 years. Terminal growth: 3%. Discount rate: 10%. The high near-term growth produces a larger stage-one present value, but the gap between discount rate and terminal growth is only 7 points, keeping the terminal value contribution moderate. Intrinsic value per share comes out near $46. At a current price of $52, margin of safety is negative (about −13%), signaling the stock may be priced above this valuation scenario.
How People Use This Calculator
- Value investors screening stocks for a margin of safety before building a position.
- Long-term holders stress-testing whether a current price still makes sense after a rally or selloff.
- Analysts comparing multiple growth and discount rate scenarios before publishing a target price.
- Investors deciding between a high-growth name and a steady compounder using the same valuation framework.
- Students and self-directed investors learning how DCF mechanics translate growth assumptions into a per-share value.
Tips for More Reliable Intrinsic Value Estimates
Never anchor on a single intrinsic value number.
Run the sensitivity table and treat the full range of outcomes as your estimate, not just the midpoint.
If the stock's current price falls below the low end of your sensitivity range, that is a much stronger signal than if it only beats your single best-guess estimate.
Keep the terminal growth rate conservative — at or below long-run GDP growth (roughly 2–3% in developed markets).
An overly aggressive terminal growth rate close to your discount rate can make the terminal value balloon to an unrealistic share of total intrinsic value, masking a weak near-term growth story with an unsustainable assumption about the distant future.
Frequently Asked Questions
What is intrinsic value and why does it matter?
Intrinsic value is an estimate of what a stock is actually worth based on its future cash-generating ability, independent of its current market price. Investors compare intrinsic value to market price to decide whether a stock is undervalued or overvalued. The gap between the two — the margin of safety — is a core concept from value investing popularized by Benjamin Graham and Warren Buffett.
What is a two-stage DCF model?
A two-stage discounted cash flow model splits the forecast into a high-growth phase (typically 5–10 years) where earnings or free cash flow grow at an elevated rate, followed by a terminal phase where growth slows to a sustainable long-run rate (often close to GDP growth, 2–3%). Each stage is discounted back to present value using the required rate of return, then summed to estimate intrinsic value per share.
What discount rate should I use?
The discount rate should reflect the weighted average cost of capital (WACC) or your required rate of return given the stock's risk. Stable, large-cap stocks are often discounted at 7–9%, while smaller or more volatile companies may warrant 10–12% or higher. A higher discount rate lowers intrinsic value because future cash flows are worth less today — it directly reflects the risk premium you demand for uncertainty.
How do I choose a terminal growth rate?
The terminal growth rate represents the company's perpetual growth rate after the high-growth phase ends. It should never exceed the long-run growth rate of the overall economy, typically capped around 2–3%. Using an aggressive terminal growth rate close to or above the discount rate produces an unrealistically high — or even undefined — intrinsic value, since the Gordon Growth formula breaks down when growth approaches the discount rate.
What is margin of safety in this context?
Margin of safety is the percentage by which intrinsic value exceeds the current market price: (intrinsic value − current price) / intrinsic value × 100. A margin of safety above 20–30% gives a cushion against forecasting errors and unexpected business setbacks. A negative margin of safety means the stock trades above your intrinsic value estimate, implying it may already be overvalued for this set of assumptions.
Why does the sensitivity table matter so much for DCF models?
DCF valuations are highly sensitive to small changes in growth rate and discount rate assumptions — a 1–2 percentage point shift can change intrinsic value by 20% or more. The sensitivity table shows intrinsic value across a grid of growth and discount rate combinations so you can see a realistic range of outcomes rather than anchoring on a single, potentially fragile estimate.
What inputs should I use for "earnings or FCF per share"?
Use trailing twelve-month (TTM) free cash flow per share if the company is mature and FCF-positive, since FCF reflects actual cash generation rather than accounting earnings. For companies where FCF is volatile or near breakeven, normalized EPS over a 3–5 year average can be a more stable starting point. Avoid using a single unusually high or low year as your base figure.
Sources and References
- Damodaran, Aswath. Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. Wiley.
- Graham, Benjamin and Dodd, David. Security Analysis. McGraw-Hill.
- CFA Institute. Equity Asset Valuation, CFA Program Curriculum.