Intrinsic Value Calculator

Intrinsic value is the true, fundamental worth of a stock based on its underlying financial performance and future earnings potential — independent of its current market price. If a stock's market price is below its intrinsic value, it may be considered undervalued and worth buying.

This calculator uses Benjamin Graham's revised intrinsic value formula: V = EPS × (8.5 + 2g) × 4.4 / Y, where EPS is earnings per share, g is the expected annual growth rate (%), 4.4 is Graham's original AAA bond yield benchmark, and Y is the current AAA corporate bond yield. This adjusts the valuation for today's interest rate environment.

The margin of safety is the gap between a stock's intrinsic value and the price you're willing to pay. For example, a 25% margin of safety means you'd only buy the stock at 75% of its calculated intrinsic value. Benjamin Graham recommended at least a 25–33% margin to protect against estimation errors and market volatility.

An undervalued stock is one trading below its intrinsic value. This means the market is pricing the stock lower than what the fundamentals suggest it's worth, potentially representing a buying opportunity for value investors who expect the price to eventually converge toward fair value.

The Graham Number is a simpler, more conservative cross-check formula: √(22.5 × EPS × BVPS). In this calculator, when book value isn't entered, an estimated cross-check is provided using the basic earnings multiple. It represents the maximum price a defensive investor should pay for a stock.

You should use the current yield of AAA-rated corporate bonds in your region (commonly the Moody's AAA Corporate Bond Yield for US stocks). Benjamin Graham originally anchored this at 4.4% in his 1962 edition of 'Security Analysis'. As yields rise, the calculated intrinsic value decreases, making the formula more conservative.

Compare the calculated intrinsic value to the stock's current market price. If the market price is significantly below the intrinsic value — ideally with your desired margin of safety applied — the stock may be undervalued and worth further research. Always combine intrinsic value analysis with qualitative research on the company's business model, management, and competitive moat.

Graham's formula works best for stable, profitable companies with predictable earnings. It is less reliable for high-growth tech companies, early-stage businesses, cyclical industries, or firms with negative EPS. The formula is most useful as a quick screening tool rather than a definitive valuation — always supplement it with DCF analysis and other valuation methods.