Unlock Hidden Stock Value: Master Graham Intrinsic Value with Our Easy Calculator!

Are you looking to invest wisely by uncovering stocks that the market may be undervaluing? Understanding intrinsic value is fundamental to value investing, and Benjamin Graham—the father of value investing—developed a simple yet powerful formula to help investors do just that.

What Is Graham Intrinsic Value?

Graham Intrinsic Value is an estimate of a stock's true worth based on its earnings and growth rate, adjusted for market conditions. Unlike just looking at the stock price, intrinsic value focuses on the fundamental financial health and earnings power of a company.

Benjamin Graham introduced this concept as part of his value investing strategy, designed to find stocks trading below their real worth, offering a margin of safety for investors.

The Graham Intrinsic Value Formula

The formula developed by Graham is:

Where:

• V = Intrinsic value of the stock

• EPS = Earnings Per Share (trailing 12 months)

• 8.5 = Base P/E ratio for a no-growth company

• g = Expected annual growth rate of EPS over the next 7-10 years (expressed as a whole number, not decimal)

• 4.4 = Average yield of AAA corporate bonds in Graham’s time (used as a baseline)

• Y = Current yield on AAA corporate bonds (expressed as a percentage like 3.5)

This formula adjusts the intrinsic value according to the company’s growth prospects and the prevailing bond yields, reflecting overall market conditions.

Why Use Graham Intrinsic Value?

• Identify undervalued stocks: Buy stocks trading below intrinsic value to gain a margin of safety.

• Long-term focus: Centers on steady growth and earnings power, not short-term market trends.

• Build confidence: Rely on a formula grounded in decades of investing experience, used by Warren Buffett among others.

• Adjust for market conditions: Takes into account bond yields reflecting the economic environment.

How to Use Graham Intrinsic Value in Your Investing Strategy

1. Gather Data: Get the company’s EPS, projected growth rate, and current bond yields.

2. Calculate Intrinsic Value: Use the formula or our easy-to-use Graham Intrinsic Value Calculator.

3. Compare Prices: Look for stocks trading below the calculated intrinsic value.

4. Decide Wisely: Invest with confidence, knowing you have a margin of safety.

Don't waste time doing manual calculations or second-guessing your investments. Our free and user-friendly Graham Intrinsic Value Calculator lets you instantly see if your stock picks have true value. Just enter the EPS, growth rate, and bond yields, and get your intrinsic value in seconds.

Final Thoughts

Benjamin Graham’s intrinsic value formula remains a cornerstone of value investing. It helps you make rational decisions by focusing on what really matters: a company’s earnings and growth potential relative to market conditions.

Ready to find undervalued stocks and protect your investments? Start calculating intrinsic values today and give your portfolio the advantage it deserves!

Take Action:

Explore your stocks’ intrinsic values now with our Graham Intrinsic Value Calculator! Unlock smarter investing and discover hidden opportunities in the market.