1. Approximate fair value: Insert the earning per share (EPS) and revenue growth (%) into the approximate fair value calculator and get the approximate true fair value (intrinsic value) of the stock.
2. Advanced Fair Value: To more accurately determine the true fair value (intrinsic value) of the stock, you can use the advanced calculator. Include earning per share, cash flow per share, earning per share growth, revenue growth, return on equity, EBIT margin and book value per share.
3. Auxiliary calculators: The auxiliary calculators serve the purpose of complementing and allowing a historical average influence on the main calculators. This will adjust the result of the fair value by the historical average to prevent short-term errors. However, you can also individually calculate the averages for the individual values or simply use the last available key figure.
The required key figures for the fundamental analysis can be found on relevant stock market websites such as Yahoo finance. There you can enter the name of the stock and usually find under the tab "fundamental ratios / financials" the required fundamental values for the calculators.
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Insert EPS and Growth into this calculator to get the approximate fair value of the stock. Use the earning per share and for growth the annual increase of revenue in %.
Guidelines for Using the Fair Value Calculator:
Insert the earning per share, cashflow per share, earnings growth in %, revenue growth in %, return on equity in %, the EBIT-marge in % and the book value per share into this advanced calculator to calculate a more detailed fair value (intrinsic value) by yourself.
If you want to calculate a stock of a foreign currency, you must first convert to Euro, then enter the values in euro into the required fields and afterwards convert it back to the target currency. All entered values must be positive and at least 0.1!
The auxiliary calculators determine the average of the EPS and the revenue growth. The results are entered into the main calculators above.
The influence of historical data over several years makes the result more accurate.
Earnings per share: Go to the "financials" tab and look for "Reported EPS". Use the diluted EPS and try to find an average value for the past years. For Apple an Earning per share of 11 would be a good guess.
Cashflow per share: Go to financials and switch to "Cash Flow". Look for the Free Cash Flow and divide the Cashflow through Common stocks issued on the same page. The result will be the Cashflow per Share. For Apple the Cashflow per share should be about 11-14 depending on which number of years you want to define this value.
Growth: To define the values for growth of earnings and revenue try to use the auxiliary calculators on this site and paste the Net Income and Revenue. Otherwise you could also calculate the growth on a manual calculator or use websites that offer free percentage calculators. Just try to calculate the yearly growth rate from one year to the next. In the next step you can calculate the average growth rate for earnings and revenue. The growth of earnings and revenue should be 10 to 30%.
Return on Equity: To find the Return on Equity switch to the tab statistics. Here you can see that the ROE is 56%.
EBIT Marge: Look for the Data "Profit Margin" or "Operating Margin" on the same page. This figure is a bit higher than 20%.
Book Value per Share: This metric is also shown on the same Page. In the example of Apple its 20.
Now paste the fundamental Key data into the advanced fair value calculator.
If you did it right the calculator will show you the Fair Value for Apple. My result for the Fair Value of Apple is between 290 USD and 320 USD.
Now you should compare this value to its real stock price. On this day one share of Apple costs 297 USD. As you can see the Apple stock is trading near its intrinsic fair value, so its whether undervalued nor overvalued.
Not try to find stocks, that show a higher Fair Value than their current market price. These stocks could be able to perform better than the overall market in the next years.
The Fair Value calculator consists of the main calculators, which reproduces the self-developed formula, two auxiliary calculators and one database.
To use the approximate Fair Value Calculator, "earnings per share" and "growth" must be entered. These key figures can easily be found on financial websites on stocks or the annual reports of stock market corporations.
The two auxiliary calculators can provide a weighted average to the two key figures that are necessary for the approximate Fair Value Calculator above.
The advanced Fair Value Calculator gives you the opportunity to calculate a more detailed fair value of your desired stock.
Flowchart of a calculation of the fair value using the two weighted average calculators for EPS and Growth and the approximate Fair Value calculator:
In the Premium database, the fair values for many stocks have already been calculated and other key figures are included in the fair values in the database. This ensures that the fair value of nearly every share worldwide is immediately accessible and members can unlimited fair values from the database. Check out all advantages within the Premium-Membership or learn about our value strategy here.
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