Estimate what a growth stock could be worth
Turn a ticker into a fair value estimate and a margin-of-safety price in a couple of minutes. You'll see what the market is already pricing in, plus a bear, base and bull case, so you can see how much room today's price leaves under your assumptions.
- Fair value + margin-of-safety price
- Bear, base and bull cases
- No spreadsheet needed
How it works
Value a stock in four steps
The calculator projects a company's earnings forward, puts a price on them and works back to what that's worth today at the return you want.
- 1
Look up a ticker
Search a company to fill in its price, P/E and earnings per share (EPS) automatically. Free members get 3 auto-fills and Pro is unlimited. Or just type the numbers in yourself. - 2
Set your assumptions
How fast you think earnings will grow, the P/E you expect at the end, how many years to project and the yearly return you want. Hover the (i) icons for plain-English help. - 3
Calculate fair value
Hit Calculate Fair Value. You'll get a verdict, the fair value today and a margin-of-safety price with a 20% cushion. - 4
Stress-test it
Check the bear case and what's priced in. If the stock only works when everything goes right, that's your answer.
Growth stock intrinsic value calculator
Uses the Reverse P/E DCF model.
For educational purposes only
This isn't financial advice. Fair value estimates rest on your assumptions, and real prices depend on far more than any model. Do your own research, and consider a qualified financial advisor, before you invest.
Market data
Your assumptions
Synced with Year 1 EPS above. Adjust either to be conservative
Your desired annual return (default 10%)
Based only on your assumptions.
Your valuation will show up here
Look up a ticker (or type in a price and EPS), check your assumptions, then click "Calculate Fair Value".
Your results, explained
How to read your results
The verdict is the headline, but the details are where the real decision happens.
- The verdict
- Potentially undervalued means fair value is more than 15% above today's price. Potentially overvalued means it's more than 10% below. Anything in between reads as fairly valued.
- Fair value vs. margin-of-safety price
- Fair value is the most you could pay today and still earn your required return, if your assumptions hold. The margin-of-safety price is 20% under that, a cushion in case you're too optimistic.
- What's priced in
- The yearly earnings growth the market needs to justify today's price. If your growth guess is lower than this, you're betting against the market's expectations.
- Bear, base and bull
- Your base case, plus a bear case (half the growth, 20% lower P/E) and a bull case (1.5x the growth, 20% higher P/E). If even the bear case looks fine, that's a strong sign.
- Year-by-year projection
- Projected EPS, P/E and price for each year, plus the yearly return you'd earn from today's price. Click a scenario card to switch the table.
- Small changes, big swings
- Growth compounds, so a few points of growth or P/E can move fair value a lot. Try a careful set of numbers before you trust a hopeful one.
This calculator is for educational purposes only and isn't financial advice. Fair value estimates depend entirely on your assumptions, and real prices depend on far more than any model.
The method behind the numbers
When you look up a ticker (free account, 3 lookups; unlimited with Pro), these values are filled in from Yahoo Finance:
- Current Stock Price: the most recent market price per share.
- Current P/E Ratio: the trailing price-to-earnings ratio (price divided by trailing twelve-month EPS). This tells you what the market is currently willing to pay for each dollar of earnings.
- Current EPS (TTM): earnings per share over the trailing twelve months. This is actual reported earnings, not an estimate.
- Year 1 EPS estimate: the analyst consensus mean EPS estimate for the next fiscal year, the average of all covering analysts, not the high or low end. The calculator uses it to set your starting growth rate (the jump from today's EPS to this estimate).
All auto-filled values are editable. If you have a different estimate from your own research, earnings calls, or company filings, override the value directly.
The Reverse P/E DCF model estimates what a stock is worth today by projecting future earnings and discounting them back to the present. Unlike traditional DCF models that project free cash flows, this approach works directly with EPS and P/E multiples, making it more accessible for individual investors.
Project Future EPS
The base is today's trailing twelve-month EPS. The growth rate you enter compounds on top of it every year for the full projection period.
Estimate Future Stock Price
Multiply the projected future EPS by the terminal P/E ratio, the multiple you expect the market to assign the stock at the end of your projection period.
Discount to Present Value
Discount the future price back to today using your required rate of return. This answers: "What should I pay today so that if the stock reaches my target price, I earn my desired annual return?"
Professional analysts never rely on a single estimate. They run multiple scenarios to understand the range of possible outcomes. This calculator automatically generates three scenarios from your base case inputs:
Bear Case: What if things go wrong?
Uses half your growth rate and a 20% lower terminal P/E. This models a scenario where earnings growth disappoints and the market assigns a lower valuation multiple, perhaps due to slowing revenue, increased competition, margin pressure, or a broader market downturn. If the stock still looks fairly priced in the bear case, that is a strong signal.
Base Case: Your best estimate
Uses your inputs exactly as entered. This should represent your most realistic, well-researched estimate of how the company will perform. Not the best case, not the worst: the most likely outcome based on the information you have today.
Bull Case: What if things go right?
Uses 1.5x your growth rate and a 20% higher terminal P/E. This models a scenario where the company exceeds expectations: stronger earnings growth, market share gains, new product lines, or a favorable macro environment. The bull case shows you the upside potential, but be honest about how likely it is.
How to read the three scenarios together
- All three positive? Even your pessimistic assumptions show upside, which is worth a closer look in your own research.
- Bear negative, base positive? The numbers work if your thesis plays out, but there's real downside risk if it doesn't.
- Bear and base negative? The stock needs the bull case to work out just to break even. That's a high-risk setup that leans on above-consensus growth.
- All three negative? The stock appears overvalued under all reasonable assumptions at the current price.
Run it multiple times with different assumptions
The most valuable thing you can do is sensitivity test. Try different growth rates (10%, 15%, 20%), different terminal P/E ratios (15x, 20x, 25x), and different time horizons (3yr vs 5yr). If the stock only looks undervalued under the most optimistic scenario, the margin of safety is thin.
Compare the terminal P/E to the current P/E
The tool tells you whether your terminal P/E assumes compression or expansion. If a stock trades at 35x today and you set 20x as the terminal P/E, you are betting on significant P/E compression: earnings growth needs to be strong enough that the stock is still attractive even with a lower multiple at exit. The projection table moves the P/E step by step from todayThe projection table applies your terminal P/E to each year so you can see how the EPS growth translates to price over time.apos;s level to your terminal P/E, so you can see how EPS growth and a changing multiple play out in the price each year.
Don't let one big year set your growth rate
The Year 1 EPS estimate often reflects a big near-term jump (like NVDA going from $4.90 to $11.12 EPS). Because it sets your growth rate, that one-year jump would be compounded across every year of your projection. For fast growers, lower the growth rate to something you believe the company can sustain for the whole period.
Use the margin-of-safety price as a reference point
The margin-of-safety price is fair value discounted by 20%. This buffer, popularized by Benjamin Graham as the “margin of safety”, accounts for the uncertainty in every assumption you make. The wider the gap between the current price and the margin-of-safety price, the more room you have if earnings growth comes in below your estimate. It's based only on your assumptions, not a guarantee.
Read the “Return (from today)” column carefully
This column shows the annualized return you would earn if you bought at today's price and the stock hit that year's projected price (that year's EPS × that year's P/E). Compare it to your discount rate. If the Year 3 return is below your required rate, the stock isn't meeting your hurdle even in the base case. If it's well above, you have a strong margin of return.
Shorter projections are more reliable
Every assumption you make carries an error margin, and that error compounds over time. A 3-year projection is far more reliable than a 10-year projection. If you are not confident in your long-term growth estimate, use a shorter time horizon and accept the narrower range of outcomes.
Expected Annual Growth Rate
This is the single most impactful input. Small changes create large swings in fair value because the growth rate compounds every year. Be conservative: analysts consistently overestimate long-term growth. Here are general guidelines:
Mature, stable businesses (utilities, consumer staples, banks)
Established companies with steady market share and pricing power
Companies in growth phases with expanding addressable markets
Use only for short projection periods (3yr). Very few companies sustain 20%+ for 5+ years
Terminal P/E Ratio
The terminal P/E is the price-to-earnings multiple you expect the market to assign at the end of your projection. It is the most sensitive input after the growth rate.
- S&P 500 average: The long-term average P/E is roughly 15-18x. Using this assumes the company matures to average market valuation.
- Industry average: Software trades at 25-35x, industrials at 15-20x, banks at 10-15x. Using the industry average is a common baseline.
- Historical range: Look at the stock's own P/E over the past 5-10 years. Using the low end gives a conservative estimate.
- Rule of thumb: If you expect above-average growth to continue past your projection period, a higher terminal P/E may be justified. But P/E expansion rarely lasts as long as investors expect.
Discount Rate
The discount rate is your required annual return, the hurdle rate that makes the investment worth your capital. Common choices:
- 8-10%: standard for large-cap, stable companies (roughly the S&P 500 long-term average return)
- 10-12%: appropriate for mid-cap growth stocks with moderate risk
- 12-15%: for small-cap or high-volatility stocks where you need extra compensation for risk
A higher discount rate produces a lower fair value, which is more conservative. If you are unsure, 10% is the standard benchmark.
- Does not work for negative earnings: Companies with negative EPS cannot be valued with this model. Pre-revenue or early-stage companies require revenue-based or asset-based valuation approaches.
- Assumes constant growth: The model applies a single growth rate across the entire projection. In reality, growth decelerates as companies get larger. A company growing at 30% today is very unlikely to maintain that for 10 years.
- Ignores balance sheet: Debt levels, cash positions, share dilution, and capital structure are not factored in. A company with heavy debt is riskier than the model suggests.
- No macro or competitive dynamics: Interest rate changes, industry disruption, regulatory risk, and competitive threats are not modeled. These factors can dramatically affect actual outcomes.
- Growth rate sensitivity: Small changes in the assumed growth rate cause outsized swings in fair value because growth compounds. A 5% difference in growth rate over 5 years can change the fair value by 30-40%.