Scenario Analysis Calculator
Expected value from bear, base and bull scenarios with probabilities.
Inputs
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.
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.
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.
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
This is exactly how our calculator works internally: bear/base/bull per stock. Reward/risk > 3 is considered attractive.
Instead of betting on a single price target, scenario analysis works with three futures: a pessimistic one (bear), a likely one (base) and an optimistic one (bull). You assign each a probability, and the calculator weights the targets into one expected value.
How the formula works
Each scenario gives a price target and a probability. The expected value is the probability-weighted average — if the probabilities don't sum to 100%, they are normalized automatically:
Upside = (expected value − price) ÷ price
Example: bear $30 (25%), base $55 (50%), bull $85 (25%). Expected value = 7.50 + 27.50 + 21.25 = $56.25. At a price of $48 that is about +17% upside.
How to read the result
Two numbers matter: the upside to the expected value and the reward/risk ratio (bull vs. bear):
- Upside above +10% — the weighted value sits clearly above the price.
- −10% to +10% — fairly valued, little buffer.
- Below −10% — the market prices in more than your scenarios support.
A reward/risk ratio above 3 is considered attractive: you risk $1 to make $3.
What to watch out for
The result is only as good as your assumptions:
- Probabilities are subjective. Even small shifts move the expected value noticeably.
- Beware of optimism. Overweighting the bull case makes any stock look attractive.
- Targets need a basis. Derive them from revenue, margin and valuation, not from gut feeling.