PVGO Calculator - Present Value of Growth Opportunities

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Choose whether to enter earnings per share directly or derive it from total earnings and shares outstanding.
The current market price per share (Vo). Use the most recent closing price or a fair-value estimate.
Expected or forward EPS (next period). Use forward EPS for forward-looking analysis; trailing EPS for historical comparison.
The required rate of return for equity investors. Often estimated via CAPM: Ke = risk-free rate + beta x equity risk premium.
%
Currency
PVGOHigh growth premium
$30.00

Present Value of Growth Opportunities per share

No-growth value per share$20.00
EPS2
PVGO as % of price60%
No-growth value as % of price40%
No-growth value$20.00
PVGO (growth premium)$30.00

PVGO is 60.0% of the share price - the market assigns a large premium for future growth.

  • Only 40.0% of the share price is explained by current earnings; 60.0% (30.00 per share) represents anticipated future growth.
  • High PVGO stocks are priced on expectations: positive surprises in earnings growth can reinforce the premium, while growth disappointments can cause sharp de-ratings.
  • This profile is common among technology, biotech, and other high-growth sectors where reinvestment opportunities are abundant and returns on equity substantially exceed the cost of capital.

Next stepStress-test the PVGO by recalculating at a higher cost of equity (e.g., +2 to +3 percentage points) to see how sensitive the growth premium is to changes in the discount rate.

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