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Free alpha and beta calculator. Measure your portfolio's market sensitivity (beta) and excess risk-adjusted return (alpha) against a benchmark index.
Margin of Safety Calculator
Calculate the margin of safety between intrinsic value and market price. Includes value scoring, max buy price, P/E & P/B analysis, and sensitivity table.
Your estimated fair value
Current assets / current liabilities
Margin of Safety⧉
33.3%
✅ Meets target
Upside Potential⧉
+50.0%
From $100 to $150
Max Buy Price⧉
$105.00
At 30% margin of safety
P/E Ratio⧉
13.3
Low — potential value
P/B Ratio⧉
2.22
Reasonable
Value Score⧉
68/100
Buy
Value Assessment: Buy
AvoidCautionHoldBuyStrong Buy
Price vs Intrinsic Value
Current Price
$100.00
Max Buy Price
$105.00
Intrinsic Value
$150.00
Buy Price Sensitivity (IV × MOS Target)
| IV \ MOS | 20% | 25% | 30% | 35% | 40% |
|---|---|---|---|---|---|
| $120.00 | $96.00 | $90.00 | $84.00 | $78.00 | $72.00 |
| $135.00 | $108.00 | $101.25 | $94.50 | $87.75 | $81.00 |
| $150.00 | $120.00 | $112.50 | $105.00 | $97.50 | $90.00 |
| $165.00 | $132.00 | $123.75 | $115.50 | $107.25 | $99.00 |
| $180.00 | $144.00 | $135.00 | $126.00 | $117.00 | $108.00 |
Green cells = buy price is above current market price (you can buy now at target MOS)
Planning notes, formulas, and examples
About the Margin of Safety Calculator
The margin of safety is the difference between a stock's intrinsic value and its market price, expressed as a percentage of intrinsic value. Coined by Benjamin Graham in "Security Analysis" and championed by Warren Buffett, it's the single most important concept in value investing — your cushion against errors in valuation, unexpected business problems, or market irrationality.
If you estimate a stock's intrinsic value at $150 and it trades at $100, your margin of safety is 33%. This means your estimate could be 33% too high and you'd still break even. The wider the margin, the lower your risk and the higher your potential return.
This calculator goes beyond a simple percentage calculation. It computes a value score (0–100) incorporating margin of safety, P/E ratio, P/B ratio, debt levels, and liquidity. The sensitivity table shows maximum buy prices across different intrinsic value estimates and MOS targets, helping you plan entry points even when your valuation has uncertainty.
When This Page Helps
Every intrinsic-value estimate contains uncertainty. The margin of safety converts that uncertainty into a concrete buying threshold, showing how much valuation error you can absorb before the investment stops making sense.
How to Use the Inputs
- Enter your calculated intrinsic value and the current stock price.
- Set your target margin of safety percentage (Graham recommended 30%+).
- Add EPS, book value, and financial ratios for the value score.
- Review the margin of safety and whether the stock meets your target.
- Check the max buy price for your target MOS.
- Use the sensitivity table to find optimal entry points for different scenarios.
Formula used
Margin of Safety = (Intrinsic Value − Price) / Intrinsic Value × 100
Max Buy Price = Intrinsic Value × (1 − Target MOS%)
Upside = (Intrinsic Value − Price) / Price × 100Example Calculation
Result: Margin of safety = 33.3%, Max buy = $105
Intrinsic value of $150 vs $100 price gives a 33.3% margin of safety, exceeding the 30% target. The max buy price at 30% MOS is $105 — the stock is currently below this, so it passes the test.
Tips & Best Practices
- A wide margin of safety compensates for estimation errors — never skip it.
- Compare your MOS to the stock's historical valuation range for context.
- High-quality businesses with durable competitive advantages deserve smaller margins (20-25%).
- Use the sensitivity table when your intrinsic value estimate has wide confidence bounds.
- Revisit your margin of safety whenever material business developments occur.
Turn Valuation Into A Buy Price
Intrinsic value on its own does not tell you when to act. The margin of safety translates that estimate into a maximum buy price so you can separate a good business from a good entry point.
Wider Margins For Higher Uncertainty
Stable, predictable businesses can justify a smaller required margin than cyclical, leveraged, or difficult-to-value companies. The more fragile the estimate, the more room you usually want between price and value.
Revisit The Thesis
A strong margin of safety today can disappear if earnings, balance-sheet quality, or capital allocation changes. Recheck the inputs whenever the business outlook or your valuation assumptions move materially.
Sources & Methodology
Last updated:
Methodology
This worksheet calculates margin of safety directly from the gap between the user-entered intrinsic value estimate and market price, then converts the chosen target margin into a maximum buy price. It also shows supporting ratios such as P/E and P/B using the user-entered EPS and book-value inputs.
The 0-100 value score on this page is an internal heuristic, not a standardized Graham or Buffett formula. It combines margin of safety, valuation ratios, leverage, and liquidity into a screening aid, so it should be treated as a quick triage metric rather than a substitute for the underlying valuation work.
Sources
- Glossary: Valuation (Investor.gov) — SEC investor-education glossary entry defining valuation as an estimate of what an asset or company is worth.
- Earnings Per Share (EPS) (Investor.gov) — SEC investor-education glossary entry defining earnings per share.
- Price-earnings (P/E) Ratio (Investor.gov) — SEC investor-education glossary entry describing the P/E ratio used in equity valuation screening.
Frequently Asked Questions
Graham suggested 30%+ for most stocks. Buffett requires 25% for high-quality businesses and 40%+ for more uncertain situations. Higher uncertainty demands wider margins.
Use our Intrinsic Value Calculator or DCF Calculator to estimate fair value from earnings, dividends, or cash flows. Multiple methods provide a valuation range.
Yes — a negative margin means the stock is trading above your estimated intrinsic value. Negative margins suggest the stock is overvalued.
They're related but calculated differently. MOS uses intrinsic value as the base; discount uses current price. A 33% MOS equals a 50% upside.
It combines margin of safety, valuation ratios, financial health, and liquidity into a single summary score. Use it as a screening aid, not as a substitute for reading the business and testing the valuation assumptions.
For stable, predictable businesses you might accept 20-25%. For cyclicals, turnarounds, or uncertain companies, insist on 40%+.
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