Intrinsic value is what a company is really worth - independent of its share price. Calculating that value, then comparing it with the market price, is the fundamental act of every value investor. This guide explains the three main methods and how to apply them to Euronext Growth small caps.
📅 May 2026⏱ 11 min read📊 Intermediate level
What is the intrinsic value of a stock?
Intrinsic value is an estimate of a company's true economic worth, calculated from its fundamentals: its earnings, its cash flows, its assets. It contrasts with the share price, which reflects what the market is willing to pay at a given moment - and which can drift away from it considerably, in either direction.
It was Benjamin Graham, the father of value investing, who formalised this concept in Security Analysis (1934) and The Intelligent Investor (1949). His conclusion: the share price oscillates around intrinsic value over the long run, but can drift away from it for months or years because of market psychology.
The basic formula of value investing Intrinsic value > Share price → Undervalued stock → Buying opportunity Intrinsic value < Share price → Overvalued stock → Avoid or sell
The gap between the two is called the margin of safety. Graham recommended buying only if this gap exceeds 30%.
The 3 methods for calculating intrinsic value
There is no single "correct" method - each approach has its strengths and blind spots. On Euronext Growth small caps, combining two methods gives a more robust valuation range than any single estimate.
Recommended for small caps
Multiples method
Valuation by sector comparison: apply a reasonable EV/EBITDA or P/E multiple to the company's normalised earnings.
Simple and quick to calculate
Anchored in real market data
Depends on the choice of reference multiple
Rigorous but sensitive
DCF (Discounted Cash Flow)
Discounting future cash flows over 5 to 10 years, plus a terminal value. The reference method in corporate finance.
Theoretically the most correct
Makes the growth assumptions explicit
Very sensitive to assumptions (rate, growth)
Hard on poorly predictable small caps
Quick check
Graham formula
√(22.5 × EPS × book value/share). A quick heuristic developed by Benjamin Graham to spot obvious discounts.
A 30-second calculation
Calibrated for the 1970s US market
Unusable for loss-making companies
Intrinsic value calculator
Enter the figures for the company you are analysing to get an estimate of its intrinsic value per share:
🧮 Intrinsic value calculator
Three methods, one valuation range
Multiples
Simplified DCF
Graham
Annual EBITDA (€k)
Sector EV/EBITDA multiple
Net debt (€k)
Number of shares (thousands)
Current share price (€)
Enterprise value (EV)64 M€
Equity value59 M€
Intrinsic value / share5,90 €
Current price5,20 €
Margin of safety+13,5 %
Verdict⚠️ Slight discount
Current FCF (€k)
FCF growth rate (5 years, %)
Discount rate (%)
Terminal growth rate (%)
Net debt (€k)
Number of shares (thousands)
Present value of FCF (5 years)—
Discounted terminal value—
Total intrinsic value—
Intrinsic value / share—
EPS — Earnings per share (€)
Book value / share (€)
Current price (€)
Formula√(22,5 × — × —)
Graham intrinsic value—
Implied P/E—
Margin of safety—
⚠️ The Graham formula was calibrated for the 1970s US market. On Euronext Growth it serves as a quick benchmark, not a reference valuation. Use the multiples method for a more precise estimate.
The margin of safety: buying at a discount
The margin of safety is the percentage gap between the estimated intrinsic value and the share price. It is the protective cushion against estimation errors.
If you estimate a stock's intrinsic value at €10 and it trades at €7, the margin of safety is 30%. Graham recommended this minimum 30% discount as a general rule. For Euronext Growth small caps, which are less liquid and less covered, a 40% margin is more prudent.
Why the margin of safety is essential
You sometimes get your estimates wrong. Future revenue is uncertain. Management can surprise on the downside. The margin of safety is not a guarantee against loss - it is a reduction in the probability of a permanent loss of capital.
A worked example: valuing a Euronext Growth small cap
Take a fictional industrial small cap, Technilog SA, trading at €4.80 on Euronext Growth. Here is how to calculate its intrinsic value using the multiples method:
Intrinsic value is a range, not a precise number
By varying the EV/EBITDA multiple from 6.5× to 9× (a reasonable range for this sector), you get an intrinsic value between €2.90 and €4.40. The decision to invest is taken on the low end of the range - not on the central value.
Intrinsic value and the ML screener
Calculating the intrinsic value of 800+ Euronext Growth stocks by hand is impossible. This is where a screener with an ML model becomes useful:
The composite score's Valuation pillar incorporates EV/EBITDA, normalised P/E, and discount to book value - three proxies for relative intrinsic value
The overall 0-100 score combines valuation, growth, quality and momentum: a high score means the stock is attractive across several dimensions at once
The XGBoost model predicts the probability of outperforming the European small-cap index over 12 months - a signal that complements absolute valuation
The screener does not replace the intrinsic-value calculation - it complements it by shortlisting the 20 to 30 cases that deserve a deeper analysis.
Identify undervalued small caps
The screener's Valuation score incorporates EV/EBITDA, P/E and discount to book value across 800+ Euronext stocks.
The intrinsic value of a stock is an estimate of what the company is really worth, independent of its current share price. It is calculated from expected future cash flows (the DCF method), net assets, or normalised earnings. If the share price is below the intrinsic value, the stock is considered undervalued - the founding principle of value investing.
The simplest method is the multiples method: intrinsic value = EBITDA × sector multiple − net debt, divided by the number of shares. The Graham formula is a quick alternative: √(22.5 × EPS × book value per share). For a more rigorous estimate, use a 5-year DCF with a discount rate of 8 to 12%.
The margin of safety is the gap between the calculated intrinsic value and the current share price. Graham recommended buying only when the price is at least 30% below the intrinsic value. On the less liquid small caps of Euronext Growth, a margin of safety of 40% is prudent.
On Euronext Growth, the multiples method (sector EV/EBITDA) is more reliable than DCF, because a small cap's long-term forecasts are unreliable. Use EV/EBITDA × normalised EBITDA to estimate enterprise value, then subtract net debt and divide by the number of shares.
Yes. Screener Small Caps calculates a composite 0-100 score that incorporates the valuation dimension (EV/EBITDA, P/E, discount to book value) among its 4 pillars. This score does not replace a bespoke DCF but lets you quickly identify the Euronext Growth stocks that trade below their estimated fundamental value.