Fair value calculator
Estimate what a stock is worth with Graham's formula, discounted cash flow (DCF) or the dividend discount model. Data for 1,200+ companies is filled in for you, and you can change it.
Graham's formula
A quick first approximation for profitable companies.
Discounted cash flow (DCF)
Ten years of free cash flow plus a terminal value, brought to today.
Dividend discount
For mature companies with a steady dividend.
How it works
The price is what the market pays today; the fair value is what you estimate the business is worth. Each method answers the same question from a different angle: earnings (Graham), the cash the company generates (DCF) or the dividends it pays. If they roughly agree, the estimate is more solid; if not, look at which assumption makes the difference.
Small changes move the number a lot: one point more of discount rate can cut the DCF value by a fifth. Use it as a range, not as a price target.
And to see what you would have made investing in it every month: compound interest calculator.
Frequently asked questions
What is a stock's fair value?
The price is what the market pays for it today; fair value is what you estimate it is worth from its business: earnings, cash generated and dividends. If fair value is well above the price, the stock may be cheap under those assumptions, and vice versa.
What is Graham's formula?
Benjamin Graham's quick first approximation: value = EPS × (8.5 + 2 × growth) × 4.4 / Y, where Y is the AAA corporate bond yield. With Y = 4.4% you get the classic formula. It only works for profitable companies.
How does discounted cash flow (DCF) work?
It projects free cash flow per share for ten years, adds a terminal value growing forever at a small rate and brings everything to today with a discount rate: the return you require. It is the most complete method, and the most sensitive to assumptions.
And the dividend discount model?
It values the stock by the dividends it will pay: next year's dividend / (required return − dividend growth). It suits mature companies with steady payouts; with no dividend it does not apply.
Which discount rate should I use?
The minimum return you require from that investment. For large, stable companies 8-10% is common; more the riskier it is (debt, cyclical sector, country).
Is it reliable?
It is an estimate: one point more or less of growth or discount rate moves the result a lot. Use it as a range and compare several methods, not as a price target.
Where does the pre-filled data come from?
From MeridIAn's latest analysis: price, earnings per share, free cash flow and dividend over the last twelve months. The starting growth is what analysts expect for next year, between 0% and 10%. You can change all of them.
Calculation tool using public data. Not investment advice. Past performance does not guarantee future results.