🎯 Stock Target Price Calculator
Estimate future stock price targets and upside potential by projecting earnings per share (EPS) growth and exit valuation multiples.
Projected Target Valuation
How P/E Multiples and Earnings Drive Share Prices
Over the long run, equity prices track corporate earnings. The target price equation Target Price = Future EPS × Exit P/E combines earnings trajectory with valuation sentiment. If earnings double while the P/E multiple holds steady, the stock price doubles.
Frequently asked questions
How is a stock target price calculated?
A standard target price is calculated by projecting current EPS (Earnings Per Share) into the future using an expected growth rate, then multiplying that future EPS by an assumed exit Price-to-Earnings (P/E) multiple.
What is multiple expansion vs multiple contraction?
Multiple expansion occurs when investors are willing to pay a higher P/E multiple for the same earnings, boosting returns. Multiple contraction happens when market sentiment cools and the P/E ratio shrinks, dampening stock price appreciation.
How many years forward should I project?
Most Wall Street equity analysts project targets 1 to 3 years forward. Long-term fundamental value investors often model 3 to 5 years forward to align with business cycles.
What is a Margin of Safety?
A margin of safety is a discount applied to your estimated target price (often 15% to 30%) to protect against forecasting errors, economic downturns, or competitive risks.