Fair Value Calculator

Estimate what a stock is worth from its earnings per share, expected growth and a P/E ratio.

MSFT

Microsoft trades at $493.78, with trailing EPS of $17.95, analysts' expected EPS growth of 18.6%, and a P/E ratio of 27.51.

Assumptions

Earnings per Share

EPS Growth Rate

Terminal EPS Growth Rate

Years

Exit P/E Ratio

Required Annual Return

Margin of Safety

EPS in Year 10

$52.00 +189.7%

Stock Price in Year 10

$1,039.91 +110.6%

Annual Return

7.7%

Current P/E Ratio

27.51

Fair Value (Earnings Multiple)

$400.93 -18.8% downside

Current Price: $493.78
Analyst Target: $572.92 +16.0%

Projected EPS and stock price

Fair value by EPS growth and exit P/E

Green cells are above the current price, red cells below. The outlined cell is your current assumption.

EPS Growth ↓ / Exit P/E →

EPS Growth ↓ / Exit P/E →	16.0x	18.0x	20.0x	22.0x	24.0x
13.6%	$256.81	$288.91	$321.01	$353.11	$385.21
16.1%	$287.25	$323.15	$359.06	$394.96	$430.87
18.6%	$320.74	$360.84	$400.93	$441.02	$481.12
21.1%	$357.56	$402.25	$446.95	$491.64	$536.34
23.6%	$397.96	$447.71	$497.45	$547.20	$596.94

How the Earnings Multiple method works

Earnings per share are grown for the chosen number of years, with growth slowing each year from the starting rate to the terminal rate, and then multiplied by the exit P/E ratio to estimate a future share price. That future price is discounted back to today at your required annual return, which gives the most you can pay now and still earn that return.

Fair Value = EPS in Year n × Exit P/E ÷ (1 + r)ⁿ

These models are estimates that depend entirely on your assumptions. They are provided for educational purposes only and are not investment advice. If you prefer a different valuation approach, try the DCF Calculator.