How to Calculate the Intrinsic Value of a Stock

By Keith Speights – Updated Oct 12, 2025 at 9:53 PM

Key Points

Intrinsic value estimates a stock's true worth, often differing from market price.
Discounted cash flow analysis calculates intrinsic value based on predicted future cash flows.
Using financial metrics like P/E ratio provides another method for assessing intrinsic value.

What is a stock worth? You could simply go with the current stock price. But that price is subject to the market's whims. Another alternative is to determine the stock's intrinsic value. The intrinsic value of a stock is its true value. It refers to what a stock (or any asset, for that matter) is actually worth -- even if some investors think it's worth a lot more or less than that amount.

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An infographic showing three common ways to calculate the intrinsic value of a stock. — Image source: The Motley Fool

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You might think calculating intrinsic value would be difficult. That's not the case, though. Not only can you determine the intrinsic value of a stock, but you can also use it to search for the best bargains in the market. Knowing an investment's intrinsic value is useful, especially if you're a value investor with the goal of buying stocks or other investments at a discount.

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About the Author

Keith Speights is a contributing Motley Fool healthcare analyst covering publicly traded companies across pharmaceuticals, biotechnology, medical devices, technology, and marijuana. Prior to The Motley Fool, Keith was CEO of Constant Care Technology, a healthcare technology company; vice president of American HealthTech, a healthcare software company; and a director of operations for Blue Cross Blue Shield of Mississippi, a health insurer. He holds a B.S. in Industrial Engineering from Mississippi State University.

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