Discount the cash a business can hand its owners, Buffett's own definition of value. Load a company to start from its real numbers.
Example inputs, not real data
Intrinsic value per share
$228.29
Equity value $228.3B
Growth runs for five years, fades to terminal by year ten, then grows at the terminal rate forever. Small changes to growth and the discount rate move the answer a lot; that's the point of a margin of safety.
Buffett's Owner's Manual defines it as the discounted value of the cash that can be taken out of a business during its remaining life. Two things follow. Value depends on cash, not reported profit, which is why we start from owner earnings. And it's an estimate: change the assumptions a little and the answer moves a lot.
Starting owner earnings grow at your chosen rate for five years, the growth rate fades in a straight line to the terminal rate by year ten, and from then on the business grows at the terminal rate forever. Each year's cash is discounted back at your discount rate, the terminal value is added, and net cash is added (or net debt subtracted) to get the value of the equity. Divide by diluted shares for a per-share figure.
Buffett has said he uses the long-term government bond rate rather than a formula built on share-price volatility, and relies on a margin of safety instead of padding the rate. Many investors add a hurdle on top of the Treasury yield so their estimate is conservative before the margin even starts. Our analyses use the 10-year Treasury plus 3%.
For a full Buffett-style read of a company, with these numbers computed for you and the judgement calls added, see the research library.