Simple online calculator for Peter Lynch's assessment process. Use Peter Lynch's rule of thumb to calculate the fair value of each share. Paste the earnings per share and expected company growth into this calculator and you will get the Peter Lynch Fair Value. Peter Lynch was one of the most successful fund managers of all time and became famous for his unique valuation methods for stocks. From 1977 to 1990 Lynch was able to achieve an average annual return of almost 30% per year with the Magellan Fund. As a representative of value investing, Peter Lynch shaped the valuation of shares and the determination of the fair value of stocks. Lynch is also the author of several stock market books, in which he presents his rule of thumb that is used in this calculator.
Peter Lynch specialized primarily in growth stocks. In addition to the fair value, he also considered the PEG ratio, which should always be below 1. In our Premium Tools you will automatically see the Peter Lynch Fair Value and the PEG Ratio for more than 30,000 shares. On the basis of this he developed a very simple but efficient formula for calculating the fair value:
Original Peter Lynch rule of thumb to calculate intrinsic value of a stock:
Peter Lynch Fair Value = Earnings per Share * Earnings Growth
So if a company can increase profits by 15% per year, the Peter Lynch Fair Value is fifteen times that profit. Since Peter Lynch also attached great importance to the PEG ratio, the result can then be multiplied by the PEG in order to determine the fair value more precisely. In our online calculator, we use the 8-25% limits for profit growth. If the entry of profit growth is lower than 8%, at least 8% is automatically calculated in the background. However, if the entered profit growth is higher than 25%, a maximum value of 25 is used.
The Peter Lynch rule of thumb for fair value is of course only an approximate estimate of the intrinsic value (fair value) of a share. In order to define the fair value more precisely, we have developed an online calculator with 7 influencing variables that provides more information about the true value of a share. If you don't feel like using the calculator manually and looking for the fundamental key figures by hand, we have already automated all evaluation procedures in the Premium Tools. With a membership in the Fairvalue-Calculator, you will receive, in addition to the Peter Lynch Fair Value and the PEG Ratio, many other helpful tools that will help you to be successful on the stock market.
The Fairvalue Calculator is also aimed at beginners who are not yet very familiar with fundamental stock analysis. In order to support beginners, we have created 6 lessons in the tutorial area in addition to a detailed explanation to make it easier to get started with buying shares. These are not too long and you can go through them one after the other. Free of charge, of course.
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