Methodology
How the calculator approaches valuation.
A transparent overview of the assumptions and formulas used by the valuation models on this website.
General principle
All outputs are estimates derived from the inputs provided. The calculator performs formula-based calculations and does not independently verify company data, forecast accuracy or market conditions. Results should be interpreted as one analytical perspective rather than a definitive valuation.
Graham Formula
The calculator applies the formula V = EPS × (8.5 + 2g) × (4.4 / Y), where EPS is earnings per share, g is the expected growth rate and Y is the applicable AAA corporate bond yield. The result depends directly on the values entered by the user.
Dividend Discount Model
The calculator uses the Gordon Growth approach: V = D₁ / (r − g). D₁ represents the next expected dividend, r the required return and g the perpetual dividend growth assumption. The required return must exceed the growth rate for the formula to be meaningful.
Discounted Cash Flow
DCF estimates value by discounting projected free cash flows and a terminal value back to the present using a selected discount rate. Forecast horizon, growth assumptions, terminal assumptions and discount rate can materially affect the output.
Rounding and display
Displayed results may be rounded for readability. Rounding does not eliminate the sensitivity of the underlying assumptions. Recheck source financial data and use consistent units when entering values.
Scenario analysis
A useful way to handle uncertainty is to test conservative, base and optimistic cases. If a valuation changes dramatically under small changes to an assumption, that assumption deserves particular scrutiny.