Intrinsic value calculator
There is no formula for intrinsic value. There are several, they answer different questions, and they return different numbers for the same company on the same day. The calculator below asks which question you are putting before it computes anything, and the answer it gives you is labelled with the model that produced it.
Three models, three questions
A liquidation value asks what is left if the business stops. A Graham Number asks what price meets two conservative ceilings at once. A discounted cash flow asks what the future cash is worth today at a rate you choose. These are not three approximations of one true figure. They are three different questions, and a page that ran one of them and printed the result under the heading intrinsic value would be answering a question you did not ask.
The product implements these three and no others as per-share values. It has no earnings power value and no dividend discount model, so neither is offered here. Owner earnings, which is net income plus depreciation and amortisation less capital expenditure, is computed and stored, but it is a cash flow rather than a value: turning it into one requires choosing a multiple, and neither the product nor this page chooses one for you.
One set of books, three answers between 2 and 21.84
The three models below are run on one invented company, described three ways with figures that are consistent with each other: current assets of 900 against total liabilities of 700, book value of 8 a share, earnings of 1.20 a share, free cash flow of 150 growing at 5 percent, 100 shares and 300 of net debt. Every figure is a round invented number and none of them is any company's filed accounts.
| Model | Value per share |
|---|---|
| Net current asset value | 2 |
| Graham Number | 14.7 |
| Discounted free cash flow | 21.84 |
The widest is roughly eleven times the narrowest, and every one of the three is computed correctly. The spread is not noise to be averaged away. It is the answer to three questions, and which of them matters depends on why you are holding the company: the liquidation figure is a floor that assumes the business is worth nothing, the Graham Number is a ceiling built from two rules of thumb, and the discounted cash flow is a going-concern estimate resting on assumptions you supplied.
This page will not average them, and that refusal is deliberate. A mean of three models built on incompatible assumptions describes no company at all, and it hides the one genuinely useful signal in the set, which is how far apart they are.
Illustrative inputs Each model loads with the same invented company described in its own terms, so switching model changes the question rather than the company. None of these figures belongs to any real business and none of them is a view on any security. Replace them with the accounts in front of you.
What this one assumes That inventory and receivables are worth what the balance sheet says, that nothing off the balance sheet comes due, and that the fixed assets and the business itself are worth nothing at all.
Four figures, three of them filed
Cash, short-term investments, receivables and inventory, from the top of the balance sheet. Everything the company expects to turn into cash within a year, carried at what the accounts say it is worth.
Everything owed, current and long term, not just the current portion. Pension deficits and lease obligations are liabilities and belong here; a figure that quietly leaves them out flatters the answer by exactly what it left out.
The current diluted count. In a liquidation the options that are in the money get exercised, so the diluted count is the one that shares out whatever is left.
For the comparison line only. Leave it blank and the value is unchanged.
| Step | Value |
|---|---|
| Current assets less total liabilities | 200 |
| Two thirds of the per-share figure, the level Graham bought at | 1.33 |
| Your price over net current asset value per share | 9.00 |
| Net current asset value per share | 2 |
- A positive net current asset value per share is rare enough that it is worth checking what the current assets are made of. Inventory that will not sell and receivables that will not be collected are both carried at full value in this figure.
What each one is assuming
| Model | Where it stops applying |
|---|---|
| Net current asset value | Everywhere except a shrinking, asset-heavy company trading near its cash. It values the fixed assets and the operating business at nothing, and it carries inventory and receivables at what the accounts say rather than what a forced sale would raise. At almost every profitable company the figure is negative, and negative is the correct answer to the question it asked. |
| Graham Number | Wherever book value has stopped tracking the assets that produce earnings. Research, brands and software are expensed as they are built, so a company whose advantage is any of those carries almost no book value and the formula returns a small number for reasons that are about accounting policy. It also returns nothing at all when either input is negative. |
| Discounted free cash flow | Wherever the cash flows cannot be forecast: a company that does not yet generate cash, one whose cash flow depends on a commodity price, or one facing a binary outcome. It also fails quietly rather than loudly, because it always returns a number, and the number is as good as the four assumptions behind it and no better. |
Why this page asks you to choose instead of choosing
A calculator that took a ticker and printed one intrinsic value would have made four decisions on your behalf and shown you none of them: which model, which inputs, which growth rate and which discount rate. The output would look like a measurement and it would be a chain of somebody else's judgements with a currency symbol on the front. That is the exact shape of thing this product was built to take apart.
So the model is your first input and the assumptions are printed next to it. Where a model cannot produce a figure the page says n/m and gives the reason in the place the number would have gone, rather than falling back to zero. A zero would sort, rank and read as a valuation of nothing, and a company whose earnings are negative is not a company worth nothing.
Three models on ten years of filings, with the working attached
Inside the product the same three run against filed accounts rather than fields you type, and every figure expands into the statement lines that produced it with the fiscal year and the filing date. Where a model is not meaningful for a company the stored value is n/m with the reason recorded, which is why the coverage page can say how far the data thins out for each one. It is a subscription and it wants a card for the trial, which is worth saying on a page that has just given you all three for nothing. What it costs.
- DCF calculator runs the discounted cash flow at full length, with the year-by-year ladder and the terminal share printed.
- Graham Number calculator takes the Graham Number apart into the two ceilings the constant is made of, and says where they stop applying.
- Methodology lists every figure the product computes, every threshold it applies, and the cases where it refuses to publish a number.
What this leaves out
Every figure here is arithmetic on inputs you supply. None of it is a valuation of any company, a view on any security, or advice. Three models agreeing would not make any of them right, and the page does not treat agreement as evidence.
The three offered are the three the product implements as per-share values. There are others in general use, including earnings power value, residual income and dividend discount models, and their absence here is a statement about this software rather than about those methods.
None of the three carries preference shares, convertibles, minority interests, pension deficits or off-balance-sheet obligations. Any of those can be large enough to change a per-share answer materially, and none of them appears in the inputs above.
All three assume the accounts are what they say they are. Nothing on this page tests revenue recognition, related-party dealings or the quality of the earnings behind the figures, and a model run on numbers that are wrong returns a precise wrong answer.
Nothing you type here is sent anywhere. The arithmetic runs in your browser and no input is stored, logged or transmitted.