Loading the page
Is this stock priced fairly, and what is it earning?
Compare a stock's price with a simple fair value estimate, and see what your target price would return.
Sample numbers. Change any field to use yours.
What your target impliesSample
Your target is more than 10% above the price
Fair value is close to today's price
Next year's earnings per share times the P/E ratio gives $108.05, within 10% of the current price. On these inputs the two roughly agree.
A target price is a guess
The price change comes from the target price you typed in. Nobody knows where a price will be in a year, so treat the return figures as an exercise, not a forecast.
Written by Elizabeth Stein
Earnings per share, grown by the growth rate you enter, times the P/E ratio you choose. With EPS of 6.67, growth of 8% and a P/E of 15, that is 6.67 x 1.08 x 15, about $108. Change any of the three and the value moves, which is the point of the exercise.
No. A large gap can mean the stock is cheap, or that the formula misses something the market sees. When the two differ a lot, recheck the earnings, growth rate and P/E you entered before trusting either number. This is a teaching model, not a recommendation.
The price change from today's price to the target you type, plus the dividend yield for each year of the time horizon you enter. Nobody knows where a price will be, so treat the return figures as an exercise rather than a forecast.