Stock Valuation Studio values every company thirty-one ways, because no single model fits every business. A cash flow projection suits a software firm and fails a bank. A dividend model suits a utility and says nothing about a company that pays no dividend. This page explains each model in plain words, grouped by family, and every name opens the Studio already set on that model.
How the Headline Value Is Chosen
Thirty-one values for one company raise an obvious question: which one leads? The Studio answers with a fixed order, the same for every company, so the headline is a matter of record and never of mood:
- First, the discounted cash flow on the base in force, the trailing twelve months of free cash flow to firm or, where that cannot be stated, the latest full fiscal year.
- Second, multiples, when trailing earnings are positive. For a real estate investment trust, the funds from operations form of the multiples model steps ahead of the plain form.
- Third, the forward estimate model, built on analyst consensus for the year ahead.
- Fourth, the revenue-build discounted cash flow, which constructs cash flow from projected revenue.
- Last, the median of all models that print a value. Only when no model computes at all does the workup report that no reliable value can be stated.
The selector on the workup can set the headline on any model, and the margin of safety, the buy price, and the verdict follow the choice. Two of the thirty-one, residual income and justified price-to-book, are two forms of one calculation, and the roster counts them once when it tallies how many models printed.
Cash Flow Models
These models project or capitalize the cash the business produces. They carry the headline for most operating companies.
| Model | What It Computes |
|---|---|
| Discounted cash flow | Ten projected years of free cash flow to firm and a terminal value, discounted to today, plus net cash, per share. |
| Exit-multiple DCF | The same projection with the ending priced at a multiple of year ten cash flow rather than a perpetual growth formula. |
| Revenue-build DCF | Builds free cash flow from projected revenue and the cash flow margin the record supports. |
| Free cash flow to equity DCF | Cash flow after interest and net borrowing, discounted at the cost of equity rather than the blended rate. |
| Adjusted present value | The company valued as if it carried no debt, plus the present value of the interest tax shield on the debt it carries. |
| EBITDA-exit DCF | Grows earnings before interest, taxes, depreciation, and amortization, converts the result to cash flow, and prices the ending at an EBITDA multiple. |
| Moat-adjusted fair value | The discounted cash flow with its discount rate and perpetual growth adjusted by a moat reading from five years of returns on invested capital. |
Earnings and Multiples Models
These models price the earnings record directly, through multiples and capitalization rates, with no projection of cash flow.
| Model | What It Computes |
|---|---|
| Forward estimate | The average analyst estimate of next fiscal year earnings per share, times a fair price-to-earnings multiple. |
| Multiples | The latest fiscal year earnings and free cash flow per share, each at its fair multiple, averaged over the parts that print. |
| Multiples (P/FFO) | The real estate investment trust form: funds from operations per share at a fair multiple. |
| Earnings power value | The average earnings per share of the whole record, capitalized at the discount rate, with no growth assumed at all. |
| Analyst growth value | The Ohlson and Juettner-Nauroth form: this year and next year consensus earnings, grown at the perpetual rate from there. |
Graham and Rule #1 Models
The classic formulas, carried with their original arithmetic and their stated presets.
| Model | What It Computes |
|---|---|
| Graham formula | Graham's revised formula: earnings times a growth multiplier, corrected for the level of bond yields. |
| Graham number | The square root of 22.5 times earnings per share times book value per share: the defensive ceiling price. |
| Growth sticker price | Earnings grown for ten years, priced at a future multiple, and discounted back at fifteen percent a year. |
| Free cash flow (10% return) | Free cash flow per share divided by a ten percent capitalization rate. One number, with no growth anywhere in it. |
Dividend Models
One family in three forms. The family prints only when the trailing yield reaches one percent of the price; below that line the dividend is too small a part of the return for the arithmetic to mean anything.
| Model | What It Computes |
|---|---|
| Dividend model | The Gordon growth model: next year dividend divided by the required return minus the growth rate. |
| Dividend model (two-stage) | Ten explicit years of dividends, five at a short rate and five fading, then the Gordon form as the terminal value. |
| Dividend model (H-model) | The Fuller and Hsia closed form of the same fade, in a single formula. |
Asset-Based Models
These models work from the balance sheet: book value, invested capital, and the liquid assets themselves.
| Model | What It Computes |
|---|---|
| Residual income | Book value carried forward by the earnings the company makes above its cost of equity, year by year. |
| Justified price-to-book value | The price-to-book ratio the return on equity justifies, from growth and the discount rate, times book value per share. |
| Economic value added (EVA) | Invested capital plus the capitalized stream of economic profit, the earnings above the full cost of capital. |
| Tangible book value per share | Book value with goodwill and intangible assets removed: the balance sheet with every soft asset taken out. |
| Net current asset value per share | Current assets minus all liabilities, per share. Graham net current asset value, negative for most operating companies. |
| Net-net value (strict form) | The strictest Graham test: cash in full, receivables at three quarters, inventory at half, minus all liabilities. |
Market and Buyer Views
Three models that price the company the way a market participant would: a growth investor rule, a leveraged buyer ceiling, and an options reading of the equity.
| Model | What It Computes |
|---|---|
| Peter Lynch fair value | Earnings per share times the sum of the earnings growth rate and the dividend yield. |
| LBO entry price | The most a leveraged buyer targeting a twenty percent annual return could pay for the company. |
| Options-based equity value | Equity read as a call option on the firm assets, with the total debt as the exercise price. |
Combinations
Three models that combine the others rather than compete with them.
| Model | What It Computes |
|---|---|
| Probability-weighted scenario value | The bear, base, and bull discounted cash flow cases blended at their scenario weights. |
| Median of all models | The middle value of every model that prints for the company, deliberately unimpressed by any single one. |
| Blended model value | The full roster blended at the published weights shown on the Across the models card, renormalized across the models that print. |
A Worked Blend: Apple
The Scenario Blend, in the Open
For Apple on October 27, 2026, the discounted cash flow printed a bear case of $170.00, a base case of $236.87, and a bull case of $342.66. The probability-weighted model blends them at one quarter, one half, and one quarter:
0.25 × 170.00 + 0.50 × 236.87 + 0.25 × 342.66 = $246.60
Every combination model in the Studio shows its working the same way, on the card, where any reader can check the arithmetic.
Which Model When
Start where the Studio starts: the discounted cash flow for an established company with positive cash flow. Reach for the dividend family when the payment is the investment case, for the asset-based models when the balance sheet carries the story, and for the Graham rules when you want to know what the filed record alone, with nothing paid for the future, will support. Then read across the roster. When models built on different ideas land near each other, the value is sturdy. When they scatter, the scatter itself is information about how much of the price rests on hope.
Three routings deserve plain statements. For banks and insurers, start with the earnings and book value family, the multiples, residual income, and justified price-to-book models in the roster above, because the cash flow models misread a balance sheet that is the business itself. For a real estate investment trust, start with the multiples model in its funds from operations form. For a company with losses and no positive cash flow, start with the revenue-build DCF, the one model that builds cash flow from projected revenue instead of from a base the company does not have. The seven calculator pages linked below take the most visited models one at a time, each with the company types it fits and the ones it does not.
Questions
Why thirty-one models instead of one good one? Because each model fails somewhere, and the failures differ. A bank defeats the cash flow models and suits the book value models. A young grower defeats the dividend family and suits the revenue build. Running the full roster shows which values agree and which rest on a single idea.
Are all thirty-one always shown? Every model prints a value or a plain statement of why it cannot: no dividend paid, a negative base, a missing input. Nothing is silently absent, and the tally on the workup counts the values and the statements separately.
Where can I read each model in depth? The Complete Guide to Stock Valuation Studio gives every model its own entry: what it is, the formula, the worked Apple figures, and the states it can report. The calculator pages linked below take the seven most visited models one at a time.
Free Tool
Free in full, with no sign-up. Enter a ticker and the workup runs all thirty-one models on the company filings, chooses a headline value by a fixed order, and prints the margin of safety and the buy price beside the current price.
Stock Valuation StudioOpen in Stock Valuation Studio →Twelve Staples the Studio Values Well
Every tile opens Stock Valuation Studio. Enter the ticker there to run all thirty-one models on the company.