Stock Price Calculator

Calculate stock fair value and risk by customizing your estimates on EPS and growth.

Company Earnings (EPS)
clear
Compan lifecycle stage
Company lifecycle stage
Manually fill EPS for year(s)
Next 12-month EPS
2nd-year EPS
3rd-year EPS
Subsequent EPS growth / year
, applied for Input the years that the growth will continue for, until the end of high-growth stage years.
Mature-stage EPS growth / year
Discount rate assumption
Risk-free rate reference
US Treasury Yields
(as of )
1 year
3 year
5 year
10 year
30 year
Risk-free rate input 10-year Treasury yield is commonly used in valuation practice
Equity risk premium
Typical equity risk premium is around 2% to 8%, affected by the following factors:
  • When the stock market is at panic situation, or when investors' risk appetite is low (unwilling to take the risk), the risk premium would be higher.
  • When the market is overheated, or investors' risk appetite is high (willing to take more risk), the risk premium would be lower.
  • When a company has more volatile earnings, it would have higher risk premium.
Required rate of stock
This stock's fair price
Price sensitivity
EPS growth achieved x x
Interest rate change
Stock fair price change to
Value change
This tool helps answer :
  1. How can I efficiently value a stock using fundamental analysis, based on EPS and its growth, without feeding unessential accounting variables or economic assumption in a discounted cash flow (DCF) model?
  2. How can I not get lost in ambiguous stock recommendation from brokers, advisors, bloggers, and youtubers? Are their estimates realistic, or too optimistic?
  3. Am I prepared for the risk due to rising interest rate or downturn growth? Can I estimate how sensitive the price may go down?
How to Use this Tool to Value a Stock

Here are the steps of how you might use a stock price calculator based on earnings estimates and other financial data:

  1. Understanding the Basics of Stock Valuation

    A stock price estimate is based on the fair value of a company's stock. Typically, it uses a variety of metrics and assumptions about the company's earnings, growth, interest rate environment, and market conditions.

  2. Gather Company Information and Earnings Data

    Before using the tool, you'll need some key inputs:

    • The Growth Stage of the Company: If the company is newly listed (IPO), a start-up, or in a knowledge-and-technology-intensive (KTI) industry, it's normally in a high-growth stage. Otherwise, it's in the mature stage, where explosive revenue growth is less expected.
    • Earnings Per Share (EPS) Estimate: This represents the company's earnings divided by the number of outstanding shares. It's a key measure of profitability. You can often find this in the company's financial reports or analyst estimates. Taking Apple Inc. for example, you may find analysts' estimates of earnings here. The analysts may have a few future years' forecasts, but the further the estimate, the less accurate it would be. Some analysts may also be biased in their estimate, especially intended to be more optimistic, so you should consider to adjust the EPS estimate by year.
    • Earnings Growth Rate: The expected growth in EPS over the future years after the manually EPS inputs. You might use historical growth rates or analyst projections for the company's future growth. The stock price is very sensitive to this input. The mature-stage EPS growth can not be higher than the discount rate; otherwise, the stock price will be an infinite number.

  3. Set the Discount Rate

    This rate reflects the time value of money and the risk associated with investing in the stock. A common approach is to use a discount rate that adds an equity risk premium (market risk premium) to the risk-free rate based on how risky you perceive the investment to be:

    • Risk-Free Rate (e.g., Treasury Yield): A rate typically based on government bonds (considered a "safe" investment). The current rates are available in the table next to the input for your reference. 10-year Treasury yield is commonly used in valuation practice.
    • Equity Risk Premium: An estimate of the return expected from the stock market above the risk-free rate. Typical equity risk premium is around 2% to 8%, affected by the following factors:
      • Current economic conditions: When the stock market is in a panic situation or when investors' risk appetite is low (unwilling to take the risk), the risk premium is higher. When the market is overheated or investors' risk appetite is high (willing to take more risk), the risk premium is lower.
      • Sector-specific or company-specific risks: A company or its sector with more volatile earnings would have a higher risk premium

    You may also check the current recommended U.S. risk-free rate and equity risk premium here.

  4. Generate Stock Fair Price Estimate

    After inputting the data, the tool should generate an estimate of the stock's intrinsic value. This is essentially what the stock should be worth based on the inputs you provided (e.g., EPS, growth, and discount rate).

    • Compare the Estimated Value to the Current Market Price: This helps you assess whether the stock is overvalued or undervalued.
      • If the tool suggests the stock's fair value is $100, but the market price is $80, it could indicate a buying opportunity.
      • Conversely, if the fair value is $100 and the market price is $120, it might be overvalued.

  5. Additional Price Sensitivity Analysis (Optional)

    To further evaluate if you want to invest in this stock, here are some risks you can test:

    • Earnings Surprise or Disappointment: This lets you shock the EPS growth to see how sensitive the stock's value is (e.g., what happens if growth slows down).
    • Change in Interest Rate: This lets you shock the risk-free rate to see how sensitive the stock's value is. In general:
      • When the interest rates rise, the higher discount rate leads to lower stock prices, due to less attractive future cash flows, higher borrowing costs for the company, and shifting investor preferences towards bonds.
      • When the interest rates fall, the lower discount rate leads to higher stock prices, due to more attractive valuations, lower borrowing costs for the company, and increased risk appetite for stocks.

      This relationship is not fixed, and market dynamics can be influenced by a wide range of factors, but generally, Treasury yield is still a key determinant in stock price behavior.

Based on the calculation results compared with the current market price and the risk of price shocked, you can assess whether or not to buy, sell, or short-sell this stock.

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