PVGO Calculator | Present Value of Growth Opportunities

What is PVGO (Present Value of Growth Opportunities)?

PVGO is a crucial financial metric that calculates the value of a company's growth opportunities beyond its current assets and earnings. It helps investors evaluate whether a company's stock price accurately reflects its future growth potential.

Understanding PVGO

The PVGO calculation estimates how much a company's expected future earnings growth will contribute to its stock price. By analyzing PVGO, investors can:

✅Evaluate growth potential beyond current operations
✅Assess whether a stock price reflects future opportunities
✅Make more informed investment decisions

How to Calculate PVGO - Step by Step

Step 1: Calculate EPS

\text{EPS} = \frac{\text{Earnings}}{\text{Number of Shares Outstanding}}

Step 2: Calculate PVGO

\text{PVGO} = \text{Share Price} - \frac{\text{EPS}}{\text{Cost of Equity}}

Example: PVGO Calculation

Let's analyze Hello Inc:

Current Stock Price: $150.00
Earnings per Share: $10.00
Cost of Equity: 8%
Expected Growth Rate: 10%

Calculation:

\text{PVGO} = 150 - \frac{10}{0.08} = 25

This indicates that $25 of Hello's stock price is attributed to future growth opportunities.

Interpreting PVGO Results

Positive PVGO

A positive PVGO indicates that investors expect the company to have valuable growth opportunities. The market is willing to pay a premium above the value of current earnings because:

📈The company has strong future growth potential
📈Reinvesting earnings may create additional value

Negative PVGO

A negative PVGO suggests that:

📉The market expects limited growth opportunities
📉The company might be better off distributing earnings as dividends

Industry Comparisons

Industry	PVGO Range (% of stock price)	Characteristics
Technology	High (40-80%)	High growth potential, significant R&D
Healthcare	Medium-High (30-60%)	Innovation potential, demographic trends
Utilities	Low (10-20%)	Stable earnings, regulated growth

Ready to Calculate PVGO?

Use our calculator above to:

1️⃣Enter your company's financial data
2️⃣Get instant PVGO calculations
3️⃣Make informed investment decisions

Need to calculate related metrics? Try our EPS Calculator or CAPM Calculator.