How We Value Stocks
QuantSoar uses 7 independent valuation models, each suited to different types of companies and market conditions. Our AI consensus algorithm weights each model based on sector fit and historical accuracy to produce a single fair value estimate with confidence score.
DCF (Discounted Cash Flow)
Best for: Stable, mature companies with predictable cash flows (e.g. Microsoft, Apple)
Fair Value = PV(Future FCF) + Terminal Value - Net Debt per Share
Inputs: Free Cash Flow, WACC, Growth Rate, Terminal Growth Rate
Graham Formula
Best for: Conservative investors seeking quick intrinsic value estimates
Fair Value = EPS × (8.5 + 2g) × (4.4 / AAA Yield)
Inputs: EPS, Expected Growth Rate, AAA Corporate Bond Yield
P/E Multiplier
Best for: Mature companies with consistent earnings history
Fair Value = 10-Year Average P/E × Current EPS
Inputs: 10-Year Average P/E, Current EPS
P/S Multiplier
Best for: Growth companies that are not yet profitable
Fair Value = 10-Year Average P/S × Revenue per Share
Inputs: 10-Year Average P/S, Revenue, Shares Outstanding
DDM (Dividend Discount Model)
Best for: Dividend aristocrats and income stocks
Fair Value = DPS × (1 + g) / (r - g)
Inputs: Dividend Per Share, Growth Rate, Required Return
EV/EBITDA
Best for: Capital-intensive companies where debt structure matters (e.g. telecom, utilities)
Fair Value = (Industry EV/EBITDA × EBITDA - Net Debt) / Shares
Inputs: EBITDA, Enterprise Value, Total Debt, Cash, Shares
Dividend Yield Fair Value
Best for: Income-focused investors
Fair Value = Dividend Per Share / 5-Year Average Yield
Inputs: Dividend Per Share, 5-Year Average Dividend Yield
AI Consensus
After running all 7 models, our AI consensus computes a weighted average. DCF and Graham receive higher weights (25% and 20%) due to their broad applicability. The consensus is then compared to the current market price to calculate a Margin of Safety.
- Undervalued: Fair value > price by 10%+
- Fair: Price within +/- 10% of fair value
- Overvalued: Price > fair value by 10%+