📈 PVGO Calculator
Calculate Present Value of Growth Opportunities
Current stock price per share
Current or expected earnings per share
Required rate of return (discount rate, typically 8-15%)
How to Use This Calculator
Enter Stock Price
Input the current stock price per share. This is the market price of the stock.
Enter Earnings Per Share (EPS)
Input the current or expected earnings per share. This represents the company's profitability per share.
Enter Required Return
Input the required rate of return (discount rate) as a percentage. This is typically 8-15% for stocks, representing the expected return investors require.
Review Results
Examine the PVGO to understand how much of the stock price is attributed to growth opportunities versus current earnings.
Formula
Present Value of Growth Opportunities (PVGO):
PVGO = Stock Price - No-Growth Value
No-Growth Value:
No-Growth Value = EPS / Required Return
PVGO Percentage:
PVGO % = (PVGO / Stock Price) × 100%
Example: Growth Stock
Stock Price: $100, EPS: $5, Required Return: 10%
No-Growth Value: $5 / 0.10 = $50
PVGO: $100 - $50 = $50
PVGO %: ($50 / $100) × 100% = 50%
✅ 50% of stock price is from growth opportunities
Example: Value Stock
Stock Price: $50, EPS: $5, Required Return: 10%
No-Growth Value: $5 / 0.10 = $50
PVGO: $50 - $50 = $0
Stock price equals no-growth value (no growth premium)
About PVGO Calculator
The PVGO (Present Value of Growth Opportunities) Calculator helps investors decompose stock price into the value of current earnings and the value of future growth opportunities. This financial analysis tool separates the "no-growth" value (based on current earnings) from the growth premium, helping you understand how much of a stock's price is justified by growth expectations versus current profitability.
When to Use This Calculator
- Stock Valuation: Analyze how much of stock price comes from growth vs current earnings
- Investment Analysis: Evaluate whether growth expectations are reasonable
- Growth vs Value: Distinguish between growth stocks and value stocks
- Valuation Decomposition: Break down stock price components
- Risk Assessment: Understand risk from growth expectations
- Portfolio Analysis: Compare growth premiums across different stocks
Why Use Our Calculator?
- ✅ Quick Calculation: Instantly calculate PVGO from stock price, EPS, and required return
- ✅ Clear Breakdown: Shows both no-growth value and growth premium
- ✅ Percentage Analysis: Shows what percentage of price is from growth
- ✅ Standard Formula: Uses standard financial formula for PVGO
- ✅ Free Tool: No cost for essential investment analysis
Common Applications
- Equity Analysis: Analyze stock valuations and growth expectations
- Investment Research: Research stocks and understand valuation drivers
- Portfolio Management: Build and manage investment portfolios
- Financial Education: Learn about stock valuation and growth premiums
Tips for Best Results
- Accurate EPS: Use current or forward-looking EPS based on your analysis
- Appropriate Required Return: Use required return that matches risk level (typically 8-15%)
- Current Stock Price: Use current market price for accurate analysis
- Compare Stocks: Compare PVGO across different stocks to understand growth premiums
- Consider Context: High PVGO may indicate high growth expectations or overvaluation
Frequently Asked Questions
What is PVGO?
PVGO (Present Value of Growth Opportunities) is the portion of a stock's price that represents the value of future growth opportunities. It's calculated as the difference between stock price and the "no-growth" value (EPS divided by required return). High PVGO means investors are paying for expected growth.
What does negative PVGO mean?
Negative PVGO means the stock price is less than the no-growth value, suggesting investors expect earnings to decline or the stock is undervalued. This is unusual and may indicate market inefficiency, declining business, or very low investor expectations.
What's a typical PVGO percentage?
PVGO percentage varies by stock type. Growth stocks typically have 50-80% PVGO (high growth expectations). Value stocks have 0-30% PVGO (low growth expectations). Mature companies may have 10-40% PVGO. The percentage shows how much of price is from growth vs current earnings.
How do I determine required return?
Required return is based on risk. Use CAPM (Capital Asset Pricing Model), risk-free rate plus risk premium, or your target return. Typical ranges: low-risk stocks 6-8%, medium-risk 8-12%, high-risk 12-20%. Use discount rates appropriate for the stock's risk level.
Should I use trailing or forward EPS?
Both can be used. Trailing EPS uses past earnings (more certain), forward EPS uses expected earnings (more relevant for growth). For PVGO analysis, forward EPS is often more appropriate since PVGO is about future growth. However, trailing EPS provides a more conservative estimate.
What if PVGO is very high?
Very high PVGO (70%+) means most of stock price comes from growth expectations. This indicates high growth expectations, which may be justified for fast-growing companies or may indicate overvaluation if growth doesn't materialize. High PVGO stocks are riskier but may offer higher returns if growth is achieved.