LATEST SPREADSHEET CORNER ARTICLE:
Calculating Intrinsic Stock Value in Excel
September 17, 2016
What is it worth? Will I pay too much? How much price safety should I build into my buy price? How does its fair value compare to the value of other opportunities? At what price should I consider selling it? Is it priced as a bargain or it is greatly overpriced?
We are talking about the intrinsic value per share of a stock as a measure of its worth—a value free of emotions or other biased influences. It is the value a knowledgeable owner would sell to a knowledgeable buyer. The biasing influences one can encounter include psychology, expectations, insider information, manipulation, current events, erroneous assumptions, etc.
In this article, I describe an Excel spreadsheet that I designed in order to estimate the unbiased worth of a company and, subsequently, its intrinsic value per share. The model gives an investor the ability to perform independent analysis in order to determine whether the stock’s intrinsic value exceeds the market price by a comfortable margin of say 15%, even 80% or more. This analytical tool is one way to detect mispricing.
Resources used to verify the workings of the Excel model are listed at the end of this article.
A simple spreadsheet that allows you to input a few estimates and see whether you will have enough savings to last through your retirement years.