These guides are the reasoning layer behind the calculators on this site. A calculator answers a question you already know how to ask. A guide is about knowing which question to ask, what inputs are defensible, and -- more often than anyone admits -- when the honest answer is that the numbers do not support a conclusion.
Every guide uses the same fictional company, Stetron Industries, so the worked examples accumulate rather than reset. Stetron generates $100m of free cash flow on 50m diluted shares, carries $200m of net debt, earns 20% on equity and trades at $37.60. That single set of numbers appears throughout, which means you can follow one business from its balance sheet through its multiples to a valuation without re-learning a new example each time.
Three rules govern what you will find here. Every claim carries a number or a concrete case. No guide repeats another's structure, because the fastest way to write worthless content is to fill one template ten times. And where a commonly repeated idea is wrong -- that a low P/E means cheap, that a high yield means a good income investment -- the guide says so and shows the arithmetic.
None of this is investment advice, and none of it depends on a forecast of where markets are going. It is a method for working out what you are paying and what you are getting, which is the part you actually control.
How to work through one
Read the method before you touch a calculator. The order matters: if you open a DCF tool and start typing numbers, you will produce a number, and the number will be wrong in a way you cannot see, because the error is in the assumptions rather than the arithmetic.
A guide here is written to be read in one sitting, with a pencil. When it presents a table of results across a range of assumptions, the point is not the middle row. It is how far the answer moves between the top and bottom row. Stetron's valuation swings from $30 to $48 on a one-point change in the discount rate and a one-point change in growth. That range is the actual output of the analysis; the $37.60 in the middle is a presentational convenience.
Once you have read the method, run your own numbers through the matching calculator rather than accepting the worked example. A valuation someone else typed in is a story. A valuation you built yourself, including the parts you got wrong, is an estimate you can revise when new information arrives.
What these guides deliberately leave out
Three omissions are intentional and worth stating, because their absence is a claim about method rather than an oversight.
- No price targets and no forecasts of where a market is going. Nothing here depends on a view about interest rates, index levels or the economic cycle. Valuation is a way of working out what you are paying and what you are getting, which is the part an individual investor actually controls.
- No lists of stocks to buy. A list is only useful if you can state the assumptions behind it, and a list is exactly the format that hides them. The framework travels; the tickers do not.
- No claim that the arithmetic settles the question. Every method on this site produces a range, and the range is often wide enough that the honest conclusion is "not obviously mispriced". Recognising that and doing nothing is a legitimate result, and one this site will keep telling you is available.
The whole method in one paragraph
Understand what the business does and how it makes money. Read the three financial statements to establish whether the reported earnings are real cash and whether the balance sheet can survive a bad year. Choose a valuation method that matches how the business actually generates cash -- a discounted cash flow for a business with free cash flow, a dividend model for a stable payer, a multiple for a mature peer group. Source inputs you can defend, run the model, then move the assumptions to see which ones the answer depends on. Cross-check with a second method from a different family, and treat a disagreement as information rather than as noise to be averaged away. Convert the result into a price you are willing to pay, using a discount large enough to absorb being wrong. Then decide how much to buy, because a correct valuation ruined by an oversized position is still a loss.
Everything below is an elaboration of one of those sentences. If you only read one, read How to Value a Stock -- it walks the full sequence on a single company, and the other guides deepen individual steps in it.
Start here
- How to Value a Stock — The full valuation sequence on one worked example, from choosing a method to setting a buy price
- Intrinsic Value vs Market Price — Why the two diverge, when cheap is not cheap, and what should force your estimate downward
- How to Compare Two Stocks — A five-axis comparison, worked side by side, and why the cheaper multiple can be the dearer stock
Reading the financial statements
- How to Read a Cash Flow Statement — The three sections, the eight sign combinations, and what each one warns you about
- How to Read a Balance Sheet — Reading the asset side properly: six ratios, the ROE decomposition, and four common traps
- Free Cash Flow: What It Is and Why It Matters — The input every valuation depends on, including a case where profit is positive and cash flow is not
Multiples and what they mean
- What Is a Good P/E Ratio? — The arithmetic of a justified multiple, and the four ways a low P/E ratio lies to you
- Dividend Yield vs Total Return — Four ten-year scenarios showing why a high yield and a high return are different things
- Margin of Safety — How big a discount a given business deserves, and why a low multiple is not the same as a discount
- The Graham Number Explained — Graham's ceiling tested on two companies, and the three things it cannot see
Income and dividends
- Dividend Investing — Testing whether a dividend is actually safe, using payout, cash coverage and leverage
The discount rate and the forecast
- WACC Explained — The discount rate built from five sourced inputs, on the same worked example
- The DCF Method Explained — The forecast half of the model, worked end to end on one cash flow
Using a guide with a calculator
The guides and the calculators are meant to be used in the same sitting. Read the method first, then run your own numbers through the matching tool rather than accepting the worked example. A valuation you did not type in yourself is a story, not an estimate.
All calculators
Grouped by the question each one answers, with a note on which to reach for when: all 18 calculators.
- DCF Calculator — fair value from five years of cash flow plus terminal value
- Dividend Discount Model — Gordon Growth valuation for dividend payers
- CAGR Calculator — compound growth rate and forward projections
- Dividend Yield Calculator — yield, income per $10,000, capital needed
- Payout Ratio Calculator — dividend safety and sustainable growth
- P/E Ratio Calculator — multiple, earnings yield, PEG, target price
- Graham Number Calculator — Graham's maximum buy price
- Total Return Calculator — price change plus dividends, annualized
- EV/EBITDA Calculator — enterprise value against operating earnings
- WACC Calculator — weighted average cost of capital for discounting
- Two-Stage DDM Calculator — high-growth then stable dividend valuation
- EPS Calculator — basic and diluted earnings per share
- P/B Ratio Calculator — price against book value, with ROE context
- Margin of Safety Calculator — discount between value and price
- Compound Interest Calculator — future value with periodic contributions
- Reverse DCF Calculator — the growth rate today's price already assumes
- DuPont ROE Calculator — break return on equity into its three drivers
- Position Size Calculator — how many shares to buy for a set risk