Stock Intrinsic Value Calculator (Benjamin Graham Formula
### Value Investing & The Benjamin Graham Intrinsic Value Model Benjamin Graham, known as the father of value investing and mentor to Warren Buffett, introduced a quantitative formula in *The.
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📐 Formula
💡 Practical Example
A stock earning $5.00 EPS with a projected 10.0% 5-year growth rate and current AAA bond yield of 4.4%: Intrinsic value is $142.50. Applying a 20% margin of safety yields a buy target price of $114.00; at a current market price of $75.00, the stock offers a 90.00% valuation upside.
📖 About Stock Intrinsic Value Calculator (Benjamin Graham Formula
Value Investing & The Benjamin Graham Intrinsic Value Model
Benjamin Graham, known as the father of value investing and mentor to Warren Buffett, introduced a quantitative formula in The Intelligent Investor to calculate the fair intrinsic value of growth companies.
Core Benjamin Graham Formula & Variables
- Revised Formula: Intrinsic Value V = [ EPS × × 4.4 ] ÷ Y
- EPS: Trailing 12-Month Earnings Per Share
- 8.5: Base Price-to-Earnings ratio for a zero-growth company
- g: Conservative 5-year expected annual EPS growth rate (%)
- 4.4: Historical benchmark AAA corporate bond yield in 1962 (%)
- Y: Current AAA corporate bond yield (%)
- Buy Price (with Margin of Safety): Max Buy Price = Intrinsic Value × (1 - Margin_of_Safety %)
Applying Margin of Safety
Warren Buffett stresses that a margin of safety (typically 20% to 30% discount to intrinsic value) protects investors against forecasting errors or sudden macroeconomic downturns.
How to Use This Calculator
Enter your Trailing 12-Month Earnings Per Share (EPS) (e.g. 5.00 in /share), Expected 5-Year Annual Growth Rate (g) (e.g. 10.0 in %), Current AAA Corporate Bond Yield (Y) (e.g. 4.4 in %), Current Market Stock Price (e.g. 75.00 in /share), and Desired Margin of Safety Discount (e.g. 20 in %). Results update instantly as you type — adjust any value to compare scenarios.
The Formula
Revised Benjamin Graham Formula: V = (EPS (8.5 + 2g) 4.4) / Y
Worked Example
A stock earning 5.00 EPS with a projected 10.0% 5-year growth rate and current AAA bond yield of 4.4%: Intrinsic value is 142.
- Applying a 20% margin of safety yields a buy target price of 114.00; at a current market price of 75.00, the stock offers a 90.00% valuation upside.
Understanding Your Result
Evaluate your result in the context of your specific use case and relevant industry standards or reference values. A single calculated result is a starting point — test two to three scenarios to understand how sensitive the outcome is to your key input assumptions. For high-stakes decisions, verify your result against a secondary source or subject-matter expert before acting.
💡 Mathematical Rigor & Applied Context
- This calculator applies exact mathematical definitions following conventions established by NIST and international standards bodies.
- Rounding errors accumulate across multi-step calculations. For precision-critical work, maintain extra significant figures through all intermediate steps.
- Many mathematical concepts have multiple valid formulations — if a result seems unexpected, verify which convention or definition applies to your context.
- Dimensional analysis (unit tracking) is the fastest way to catch formula errors. Every term in an equation must have consistent, compatible units.
- Numerical methods used in digital calculators introduce floating-point precision limits (~15 significant digits for IEEE 754 double precision).
- For statistical and probabilistic calculations, always specify whether you are working with population parameters or sample statistics — formulas differ.
- Visualizing a problem geometrically or testing with known boundary values (zero, infinity, negative) reveals hidden errors faster than algebraic checking.
- When in doubt, validate your result against a simplified hand calculation or a published worked example from a textbook or standards document.
Results are for informational and educational purposes only. Always verify critical decisions with a qualified professional.