Quick Fair Value Estimate: Earnings, Graham, Book Value
Three classic quick estimates in one: earnings, Graham and book-value anchors.
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Inputs
Earnings per share (EPS)
Also called: EPS, net income per share
Where to find it: Bottom of the income statement, or the key-stats box on finance portals.
How to derive: Net income ÷ shares outstanding.
Growth rate
Also called: Growth per year
Where to find it: Analyst estimates or the company’s historical earnings/revenue growth.
How to derive: (value now ÷ value n years ago)^(1/n) − 1. Estimate conservatively!
P/E ratio
Also called: Price/earnings, KGV
Where to find it: Listed on any stats page.
How to derive: Share price ÷ earnings per share (EPS).
Book value per share
Also called: BVPS, equity per share
Where to find it: Balance sheet: shareholder equity ÷ shares. Often listed directly as a stat.
How to derive: Shareholder equity ÷ shares outstanding.
Share price
Also called: Stock price, market price
Where to find it: Any finance site (Google/Yahoo Finance), the current trading price per share.
How to derive: Set by the market; just enter the current price per share.
Result, live
Deliberately simplified - good for a first feel. The full valuation (up to 26 models on real filings) is free in our calculator.
The quick calculator returns a rough fair value in seconds from three classic anchors: earnings, Graham's growth formula and book value. Ideal for a first impression before you dig deeper into a stock.
How the formula works
The calculator builds three simple values and averages them, so the weaknesses of any single method partly cancel out.
Graham anchor = EPS × (8.5 + 2g)
Book anchor = book value × 1.5
Fair value = average of the three
Example: EPS $5, fair P/E 15, growth 6%, book value $38: anchors $75, $102.50 and $57 → average ≈ $78.
How to read the result
- Upside above +10%: price below the quick estimate, worth a closer look.
- −10% to +10%: roughly fairly valued.
- Upside below −10%: expensive at first glance.
What to watch out for
- Deliberately rough: three rules of thumb are no substitute for real analysis on the filings.
- Anchors can diverge widely: if the three values scatter, the average says little.
- Not for edge cases: loss-makers, banks or high-growth names need more fitting models.
Frequently asked questions
Why average three methods?
Each anchor has blind spots. The average dampens outliers and gives a robust first read faster than any single formula.
What fair P/E should I use?
For stable firms often 12–18. Go higher only for demonstrably strong, reliable growth, when in doubt, stay conservative.
Is this enough for a buy decision?
As a quick filter yes, for the decision no. Our Fair Value Calculator runs the same stock through up to 26 models on real filings, for 35,000+ names, with no typing at all.