Stock Valuation Calculator
Quickly estimate fair value with Gordon Growth and 2-Stage DCF—no download required.
How to Use the Stock Valuation Calculator
1. Enter Your Company’s Data
| Field | What to Input | Sheet Cell |
|---|---|---|
| Earnings per Share (EPS) | Latest EPS (e.g. 2.15) |
B3 |
| Dividend per Share (DPS) | Latest DPS (e.g. 0.50) |
B4 |
| Return on Equity (ROE %) | Enter as percent (e.g. 22.7%) |
B5 |
| High-Growth Period (Years) | Forecast horizon (e.g. 5) |
B6 |
| Terminal Growth Rate (%) | Long-term growth (e.g. 4.0%) |
B7 |
| Book Value per Share (BVPS) | Latest BVPS (e.g. 15.30) |
B8 |
| Debt / Equity Ratio | Target leverage (e.g. 0.50) |
B9 |
| Risk-Free Rate (%) | Current Rf (e.g. 3.5%) |
B14 |
| Beta (β) | Equity beta (e.g. 1.2) |
B15 |
| Equity Risk Premium (%) | ERP (e.g. 4.5%) |
B16 |
2. What the Calculator Does
- Reinvestment Needs: Computes a sustainable growth rate g = ROE × retention, then allocates reinvestment per share between equity and debt based on your D/E ratio.
- Initial FCFE: Calculates FCFE₀ = EPS – (equity-funded reinvestment).
- Project FCFE₁: FCFE₁ = FCFE₀ × (1 + g).
- Cost of Equity: Uses CAPM → kₑ = Rf + β × ERP.
- Valuation:
- Gordon Growth: P₀ = FCFE₁ ÷ (kₑ – gterm).
- Two-Stage DCF: PV of high-growth CFs (years 1…N) + PV of terminal value at N.
3. Run the Calculation
- Fill in all 10 input fields above.
- Click the Calculate button.
- See both GGM and 2-Stage DCF values appear instantly.
4. Interpretation & Next Steps
- Compare the calculated values to the current market price to assess under- or over-valuation.
- Run what-if scenarios by adjusting growth, leverage, or capital-structure assumptions.
- Use the output as a starting point for deeper financial modeling or comparative peer analysis.
About the Models
Gordon Growth Model
The Gordon Growth Model (also called the “Dividend Discount Model”) values a stock by assuming its future cash flows to shareholders (dividends or free cash flow) grow at a constant rate forever. It’s like saying, “If I know this business will increase its cash payout by 4% every year and I require a 10% return, what’s that worth today?”
- Key idea: A steady, perpetual growth rate.
- Formula (per share):
P₀ = FCFE₁ ÷ (kₑ – g)
Where:FCFE₁= Next year’s cash per share (this year’s cash × (1 + g))kₑ= Your required return (cost of equity)g= Growth rate (decimal form, e.g. 0.04 for 4%)
- When to use: Stable, mature companies with predictable cash flow growth.
Two-Stage DCF Model
The Two-Stage Discounted Cash Flow model breaks a company’s future into two phases: 1) A high-growth phase where cash flows rise quickly for a set number of years, then 2) A stable phase where growth settles into a long-term rate.
-
High-Growth Period (Years 1 to N):
Project cash per share for each year using a higher growth rate, discount each back to today. -
Terminal Phase (Year N onward):
Assume a constant, lower growth rate forever, calculate a “terminal value,” then discount it back.
Total Value per share = Present value of the high-growth cash flows + Present value of the terminal value.
When to use: Companies expected to grow faster for a handful of years before settling into a more predictable pace.