Growth Stock Intrinsic Value Calculator
Estimate a stock's fair value using the Reverse P/E DCF model.
For Educational Purposes Only
This calculator is not financial advice. Intrinsic value estimates are based on assumptions that may not reflect future reality. Stock prices depend on countless factors beyond any model. Always conduct your own research and consider consulting a qualified financial advisor before making investment decisions.
Market Data
Your Assumptions
Synced with Year 1 EPS above — adjust either to be conservative
Your desired annual return (default 10%)
Enter stock data to see valuation results
Fill in the inputs, review your assumptions, then click "Calculate Fair Value" to run the valuation.
How to Use This Calculator
Look up a stock
Type a ticker symbol or company name in the search bar. The tool auto-fills the current stock price, trailing P/E ratio, trailing EPS (TTM), and analyst forward EPS from Yahoo Finance. All values can be manually adjusted.
Review the market data
Check the auto-filled values under Market Data. The Current P/E tells you what the market pays per dollar of earnings today. The Forward EPS is the analyst consensus mean estimate for the next fiscal year — this is the average across all covering analysts, not the high or low end. If you disagree with any value, override it.
Set your assumptions
Under Your Assumptions, set the expected annual growth rate, terminal P/E, projection period, and discount rate. The growth rate is the sustained annual EPS growth you expect after the forward EPS year — the near-term analyst jump is already captured in the forward EPS. These assumptions drive the entire valuation, so take time to research them.
Click "Calculate Fair Value"
The results panel shows your base case fair value, upside/downside vs. current price, margin of safety price, three scenario analyses (bear/base/bull), a visual price bar, and a year-by-year projection table. Adjust your assumptions and recalculate as many times as you like.
When you look up a ticker, the following values are auto-filled 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.
- Guided Forward EPS — the analyst consensus mean EPS estimate for the next fiscal year. This is the average of all analyst estimates covering the stock. It is not the high or low end of the range. If provided, the calculator uses this as the starting point for growth projections instead of trailing EPS.
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
If a forward EPS is provided, that becomes the base. Otherwise trailing EPS is used. The growth rate you enter compounds annually on top of that base 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? Strong conviction buy signal — even pessimistic assumptions show upside.
- Bear negative, base positive? Moderate conviction — the stock is attractive if your thesis plays out, but there is real downside risk.
- Bear and base negative? The stock needs the bull case to work out just to break even. High risk unless you have very high conviction in 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 applies your terminal P/E to each year so you can see how the EPS growth translates to price over time.
Use the forward EPS wisely
The guided forward EPS from Yahoo Finance is the analyst consensus mean for the next fiscal year. This captures the big near-term growth jump (like NVDA going from $4.90 to $11.12 EPS). Your annual growth rate then compounds on top of that forward EPS for the remaining years. Do not double-count the near-term growth by also setting an aggressive annual growth rate.
Use the “Buy Below” price as your entry target
The Buy Below 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 current price and the Buy Below price, the more room you have if earnings growth comes in below your estimate. Use it as your target entry price, 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 (EPS × terminal 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%.