Warren Buffett Stock Calculator

Q: What is intrinsic value in stock investing?

Intrinsic value is the actual, true worth of a stock based on its underlying business fundamentals, rather than its current market price. Warren Buffett focuses on finding stocks trading below their intrinsic value, providing a 'margin of safety.'

Q: How does Warren Buffett calculate intrinsic value?

Buffett uses a discounted cash flow (DCF) approach, projecting future earnings or cash flows and discounting them back to present value. The key inputs are current earnings, expected growth rate, and the discount rate (required rate of return).

Q: What discount rate should I use?

Buffett typically uses the 10-year Treasury bond rate as a minimum, but many value investors use 10-15% to account for risk. A higher discount rate results in a lower intrinsic value, providing a larger margin of safety.

Q: What is a margin of safety?

The margin of safety is the difference between a stock's calculated intrinsic value and its market price. Buffett looks for stocks trading at least 25-50% below their intrinsic value to protect against calculation errors and unforeseen risks.

Q: How accurate is this calculator?

No valuation method is perfectly accurate. The calculator provides an estimate based on your inputs. The accuracy depends on how realistic your growth rate and other assumptions are. Always do thorough research before investing.

Q: What EPS should I use - basic or diluted?

Use diluted EPS as it accounts for all potential shares that could be issued (from options, convertible securities, etc.). This gives a more conservative and accurate picture of earnings per share.

Free Warren Buffett intrinsic value calculator. Calculate a stock's true value using Benjamin Graham and Warren Buffett's valuation method. Make smarter investment decisions.

Results

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Intrinsic Value

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Projected EPS

Margin of Safety

Recommendation

How to Use

Enter Current EPS

Input the company's current Earnings Per Share (EPS). You can find this in the company's financial statements or on financial websites.

Set Growth Rate

Enter the expected annual EPS growth rate. Be conservative - Buffett recommends using realistic, sustainable growth estimates.

Choose Discount Rate

Select a discount rate (typically 10-15%). This represents your required rate of return and accounts for risk.

Set Time Period

Choose the projection period (5-10 years is typical for this analysis).

Calculate Intrinsic Value

Click Calculate to see the stock's intrinsic value and compare it to the current market price.

What is Warren Buffett's Valuation?

Warren Buffett's valuation method is rooted in Benjamin Graham's value investing principles. The core concept is determining a company's intrinsic value—what it's actually worth—and comparing it to its market price.

Buffett describes intrinsic value as "the discounted value of the cash that can be taken out of a business during its remaining life." This approach projects future earnings, discounts them to present value, and sums the results.

Intrinsic Value = Σ (EPS × (1 + g)^n) / (1 + r)^n + Terminal Value

Where:

EPS = Current Earnings Per Share
g = Expected growth rate
r = Discount rate (required return)
n = Number of years

The key to Buffett's success is only buying when there's a significant margin of safety—when the market price is substantially below the calculated intrinsic value.

Frequently Asked Questions

What is intrinsic value in stock investing?

How does Warren Buffett calculate intrinsic value?

What discount rate should I use?

What is a margin of safety?

How accurate is this calculator?

What EPS should I use - basic or diluted?

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