Intrinsic Value Calculator

Enter the Earnings Per Share — the company's trailing twelve-month or latest fiscal-year EPS. You can type it in yourself or search a stock above to auto-fill real EPS, historical growth, and the current price.

Set the Expected EPS Growth rate — your conservative estimate of annual earnings growth over the next 7-10 years. Auto-filled growth uses the average of the last few fiscal years, clamped to 0-25% because Graham intended the formula for sober, sustainable growth assumptions.

Enter the current AAA Bond Yield to adjust the result for today's interest rates, and optionally the Current Stock Price to see the upside (or downside) versus the formula's intrinsic value, complete with an undervalued / fairly valued / overvalued verdict.

Benjamin Graham published the original formula in The Intelligent Investor as a shortcut for valuing growth stocks. The 8.5 is the price-to-earnings ratio Graham considered fair for a company with zero earnings growth. The 2g term is the growth multiplier: each percentage point of expected annual EPS growth adds two points to the fair P/E, so a company growing 8% per year earns a fair multiple of 8.5 + 16 = 24.5×.

The revised version adds the 4.4 ÷ Y interest-rate adjustment: 4.4% was the yield on AAA corporate bonds when Graham first published the formula, and Y is the current AAA yield. When bonds pay more, stocks must be cheaper to compete — so higher yields shrink the intrinsic value, and lower yields expand it.

Worked example: a company earning $5.00 per share, expected to grow 8% per year, with AAA bonds yielding 5%, is worth $5.00 × (8.5 + 16) × 4.4 ÷ 5 = $107.80 per share by the formula.

The Graham formula is a brilliant back-of-the-envelope check, but it has real limitations. The 2g growth multiplier is crude: it rewards every point of growth equally and linearly, which overvalues fast growers — Graham himself warned against applying it to high-growth stocks. It ignores debt and balance sheet quality, so a leveraged company and a cash-rich one with the same EPS get the same value. And it ignores sector context — a utility and a software company with identical earnings and growth deserve very different multiples because their capital intensity, margins, and durability differ.

That's why serious valuation work triangulates. Fair Price Index's fair value blends three independent models: a discounted cash flow model (50%) that values actual cash generation rather than accounting earnings, a relative valuation (30%) that compares multiples against sector peers, and analyst consensus targets (20%) that capture forward expectations. Where one model has a blind spot, the others compensate. Search a stock in the calculator above and you'll see both numbers side by side — often the gap between them is the most informative part.

Neither approach produces a guaranteed number. Every intrinsic value is an estimate built on assumptions, which is exactly why Graham also insisted on a margin of safety between the estimate and the price you pay.