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What is this company worth, and is its stock cheap or dear?
$92.45
This week: change the growth rate by two points and see whether the value still sits near the price.
Illustrative inputs, not current company data or trading recommendations. Enter cash flow available to equity investors after reinvestment and financing, and use a matching cost-of-equity discount rate. The blended weights and ±20% range are teaching assumptions, not a confidence interval. Ratio ratings depend on industry context. This model does not support loss-making or negative-equity companies.
| Metric | Current | Benchmark | Rating |
|---|---|---|---|
| P/E ratio | 27.29 | Industry: 24.5 | Slightly outside benchmark |
| P/B ratio | 41.20 | Industry: 3.8 | Outside benchmark |
| PEG ratio | 3.79 | Common reference: < 1.0 | Outside benchmark |
| ROE (%) | 160.14% | Common reference: > 15% | Well inside benchmark |
| Current ratio | 1.01 | Common reference: 1.5-3.0 | Slightly outside benchmark |
| Liabilities/equity | 4.66 | Common reference: < 0.5 | Outside benchmark |
Valuation methods:
Key ratios:
Written by Elizabeth Stein
The calculator's own starting figures model a company priced at $175.50 a share, with $6.43 in earnings per share, $4.26 in book value per share, $84.73 billion in free cash flow and 15.5 billion shares outstanding, growing free cash flow at 7.2% a year for five years with a 10% discount rate and a 2.5% terminal growth rate. That produces a discounted cash flow value of about $91 a share. The three multiples add a P/E-based estimate of about $158, a P/B-based estimate of about $16, and a PEG-based estimate of about $56. Blended together, the intrinsic value comes out to roughly $92, well below the $175.50 price, for a margin of safety around negative 90% and a call of far above model value.
Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.
A blended intrinsic value hides real disagreement between its four inputs. In the worked example above, the discounted cash flow and P/B estimates both suggest the stock is expensive, while the P/E estimate alone would call it closer to fair. Before acting on the final call, look at the four components separately. When they roughly agree, the blended number means something. When they're spread far apart, the disagreement itself is more useful than the average.
A common starting point is a company's cost of equity, often estimated somewhere between 8% and 12% for a typical established company, higher for a smaller or riskier one. The model requires it to be higher than your terminal growth rate, or the terminal value calculation breaks down.
Because the P/B-based estimate is book value times an industry multiple, and it gets 20% of the blended weight. A company that has bought back a lot of stock over the years can have a very low book value per share relative to its price, which pulls the P/B estimate, and the blend, well below a price the market may still see as fair based on earnings and cash flow.
No. It means the current price is well above this specific blended model's estimate, using the assumptions you entered. A different discount rate, growth assumption or set of industry multiples can move the call substantially. Treat it as a prompt to look closer, not a verdict.
The terminal value formula divides by the gap between the two rates, so as that gap shrinks toward zero the terminal value grows toward infinity. The calculator blocks this by requiring the discount rate to exceed the terminal growth rate.