ruly Margin of safety calculator
The margin of safety measures the gap between your estimate of a share’s value and its price. Enter your fair value and the share price, in the same currency.
The formula
Margin of safety = (fair value − price) / fair value. Price that gives the target margin = fair value × (1 − target margin).
How to read the result
A 30% margin means the gap between your fair value and the price equals 30% of the fair value. A negative margin means the price is above your estimate. The margin leaves room for an estimation error: the larger it is, the more your estimate can be wrong before the price exceeds it.
Limits of the calculation
The result is only as good as the fair value you enter. An optimistic estimate gives a comfortable but misleading margin. Also write down the method behind your fair value, so you can review it when the figures change.
Glossary entries
Apply your own criteria, one stock at a time
In the app, you choose your criteria and thresholds, enter your figures and find the dated history of every analysis. The free account only takes an email address.
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