Sticker Price Calculator
Work out a stock's Sticker Price (fair value) and margin of safety buy price, Rule #1 style. Fill it from any stock we cover, or enter your own numbers.
Fill from a stock (optional)
Uses PaybackPrice's stored numbers for that stock. You can change any of them.
The earnings base our model uses
The P/E the market pays at the end
PaybackPrice uses 9%; many Rule #1 investors use 15%
PaybackPrice uses 60%; many Rule #1 investors use 50%
To compare with the result
Result
Share price
—
Sticker Price
$0.19
fair value
Buy price
$0.07
margin of safety
The steps
- Future EPS: $0.09 × (1 + 2.1%)10$0.11
- Future price: $0.11 × 4 P/E$0.44
- Sticker Price: $0.44 ÷ (1 + 9%)10$0.19
- Buy price: $0.19 × (1 − 60%)$0.07
Questions
What is the Sticker Price?
It's what a company is worth today if its earnings keep growing as you expect. Grow today's earnings per share for 10 years, multiply by the P/E the market is likely to pay then, and discount that future price back to today at your minimum yearly return.
What is the margin of safety buy price?
It's the price you'd actually pay: a discount to the Sticker Price that protects you if your estimates are too optimistic. PaybackPrice uses 60%, so the buy price is 40% of the Sticker Price.
Why does the calculator start at 9% and 60%?
They're the numbers PaybackPrice uses for every stock: a 9% minimum yearly return with a 60% margin of safety. Many Rule #1 investors use 15% and 50% instead. Both are just settings here: type 15 and 50 to use those.
What growth rate should I use?
Rule #1 suggests the lower of the company's historical growth (for example, equity per share) and analysts' estimates, and never more than 15% a year. When you fill from a stock, we use the growth rate our own model applied.
Why is PaybackPrice's own value different?
This calculator holds growth flat for 10 years using one formula. Our own valuation picks a method that suits the business (cash flow, dividends, book value and others), lets growth fade over time, and checks the result for plausibility.
PaybackPrice has already worked out a fair value and buy price for more than 2,400 US stocks, and can tell you when one reaches its buy price.
For education only, not investment advice. The result is only as good as the numbers you put in. More calculators