Warren Buffett's Owner Earnings formula.
This Intrinsic Value Calculator is based on Warren Buffett "Ten Cap Price" otherwise known as "Owner Earnings" calculation. Buffett is calling Owner Earnings: "the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses."
There are many different ways to calculate Intrinsic Value. For example based on DCF (Discounted Cash Flow) Model or EPS (Earnings Per Share). Our new "Intrinsic Value Calculator DCF" and "Intrinsic Value Calculator EPS” applications are also available on AppStore.
Per Warren Buffett Value Investment Theory the buy decision should be based on several factors:
1. Company must have competitive advantage...
2. Company performed admirably in the past 10 years, recovered after market correction(s) and recession(s)...
3. Company must have long term prospects - be relevant in 10 years from now...
4. Company's market price should be 20-30% less than calculated intrinsic value - margin of safety price.
The logical question you would ask is how is it possible for such a good company to have the market price 20-30% bellow intrinsic value? The answer is: YES it's possible. The potential reasons could include: bad news about the company, company's industry is out of market favor, market is in correction or recession.
Warren Buffett indicator -> the historical ratio of Total Market Cap over GDP is currently at 167.5%. Meaning we are in the biggest Stock Market BUBBLE in history!
This proves that current stock Market Bubble is bigger than "DOT-COM Bubble" of 2001 or "Housing Bubble" of 2008. It's just a matter of time before it will POP presenting an opportunity for Value Investors to buy their favorite stocks for less than intrinsic value! But in order to buy your favorite stocks for less than intrinsic value you need to know what this intrinsic value is. This is when our Intrinsic Value Calculator comes handy. You can calculate, store, reload and compare intrinsic value with market price anywhere and anytime, and all you need is your phone and our application.
The goal of this application is to help value investors with calculation of intrinsic value. Most of the values required for calculation could be found on company's latest annual report. Annual reports can be found on company's website in investor relations section. Values missing in annual report could be found on GOOGLE.
Our calculator comes with 11 Examples: Tesla, Bank of America, JPMorgan Chase, Alibaba, Baidu, Microsoft and all FAANG stocks: Facebook/Meta, Apple, Amazon, Netflix and Alphabet’s Google.
This calculator doesn’t take growth into account. In case if you want to calculate Intrinsic Value based on growth, you can try our new "Intrinsic Value Calculator DCF" and "Intrinsic Value Calculator EPS" applications also available on AppStore.
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