A.I.M. Users Bulletin Board

[aptus]

Hi Jerry,

There are a few ways to calculate a stock's fair value. One of the most used is the Discounted Cash Flow (DCF) method.

You can find it explained here --> http://www.moneychimp.com/articles/valuation/valuation_theory.htm

And you can find a calculator here --> http://www.moneychimp.com/articles/valuation/dcf.htm

Benjamin Graham devised a short hand formula to calculate fair value and published it in his book, The Intelligent Investor. There have been a few minor variations over the years.

You can find an example here --> http://www.grahaminvestor.com/articles/finding-undervalued-stocks-intrinsic-value

The bottom line is that nobody can accuarately forecast a stock's fair value over the long term. However both of these methods give you a pretty good guesstimate.

I hope this helps.