Intrinsic Value Calculator (Graham Formula)

Graham’s formula gives a no-growth company a P/E of 8.5 and adds two P/E points for each percent of expected growth, adjusted for interest rates (4.4% was the AAA yield when he wrote it). Use cautious growth estimates.

How to use the Intrinsic Value Calculator

1. Earnings per share
2. Expected annual growth rate
3. Current AAA corporate bond yield
4. Current market price

Results update as you type, and every field accepts the units shown in its menu.

How it works

Enter EPS, the expected annual growth rate, the current AAA corporate bond yield and the market price.

Tips

• Take figures from the same financial statements and the same fiscal year.
• Compare ratios with companies in the same industry, not across industries.
• Use several valuation measures together; no single ratio tells the whole story.
• Market prices change every second – refresh the share price before you rely on a result.

Common mistakes to avoid

• Mixing per-share figures with company totals.
• Using trailing earnings for one company and forward earnings for another.
• Forgetting dilution from options and convertible securities.

Inputs explained

What each result means

• Intrinsic value per share = [Earnings per share]×(8.5 + 2×[Expected annual growth rate])×4.4÷[Current AAA corporate bond yield]
• Margin of safety = ([Intrinsic value per share] – [Current market price])÷[Intrinsic value per share]×100
• Implied P/E = [Intrinsic value per share]÷[Earnings per share]

Example values

How the main result changes when Earnings per share changes and everything else stays at the example values above: