What is the Rule #1 sticker price?

Popularised by Phil Town, the sticker price is a stock's fair value today. You project EPS ten years out, multiply by a future P/E to get a future price, then discount it back at your minimum acceptable rate of return (MARR), typically 15% a year.

What is the margin-of-safety (MOS) buy price?

Rule #1 says only buy at a 50% discount to the sticker price. So the MOS buy price is simply the sticker price halved — the price that gives you a cushion if your estimates are wrong.

What future P/E should I use?

Phil Town caps the future P/E at the lower of twice the growth rate and the stock's historical P/E. This calculator defaults to 2× growth when you leave the field blank, and lets you override it.

Rule #1 targets a 15% annual return — the rate Town argues a careful investor should demand. A higher MARR produces a lower sticker (you demand a better deal); a lower MARR raises it.

Phil Town

Rule #1 Sticker Price Calculator

Phil Town's sticker price and margin-of-safety buy price from future earnings.

Sticker = future EPS × future P/E ÷ (1 + MARR)¹⁰ · Buy ≤ Sticker × 50%

Current EPS

Trailing-twelve-month earnings per share.

Est. EPS growth

Phil Town uses the lower of analyst & historical.

Future P/Eoptional

Blank defaults to 2 × growth rate (Town's cap).

Min. return (MARR)optional

Rule #1 default is 15%/yr.

Current priceoptional

Add it to see if it's in the buy zone.

Enter current EPS and an estimated growth rate.

Embed this calculator

Run a finance blog or newsletter? Drop this on your own site — free, no attribution required beyond the link it carries.

<iframe
  src="https://www.valuo.tech/embed/rule-one-sticker-price-calculator"
  width="100%" height="560" frameborder="0"
  title="Rule #1 Sticker Price Calculator by Valuo"
  style="border:1px solid #e5e7eb;border-radius:16px;max-width:560px">
</iframe>

How it works

Phil Town's Rule #1 method works backwards from a future selling price. Grow today's EPS at your estimated rate for ten years, multiply by a sensible future P/E to get a future price, then discount that back to today at your minimum acceptable rate of return (15% is the Rule #1 default). That present value is the sticker price — fair value now.

Then comes the discipline: only buy at half the sticker price. That 50% margin of safety is the whole point — it protects you when your growth estimate turns out optimistic, which it often will. The calculator shows both the sticker and the buy price, and flags whether today's price is in the buy zone.

Frequently asked

What is the Rule #1 sticker price?: Popularised by Phil Town, the sticker price is a stock's fair value today. You project EPS ten years out, multiply by a future P/E to get a future price, then discount it back at your minimum acceptable rate of return (MARR), typically 15% a year.
What is the margin-of-safety (MOS) buy price?: Rule #1 says only buy at a 50% discount to the sticker price. So the MOS buy price is simply the sticker price halved — the price that gives you a cushion if your estimates are wrong.
What future P/E should I use?: Phil Town caps the future P/E at the lower of twice the growth rate and the stock's historical P/E. This calculator defaults to 2× growth when you leave the field blank, and lets you override it.
Why 15% (MARR)?: Rule #1 targets a 15% annual return — the rate Town argues a careful investor should demand. A higher MARR produces a lower sticker (you demand a better deal); a lower MARR raises it.

Skip the inputs

Don't want to hunt down the numbers?

Valuo pulls real financials and runs this — plus Buffett DCF, Graham, Lynch PEGY and Rule #1 — on any ticker automatically. Free account, no card.

Analyze any stock free Create free account

More free valuation tools

DCF Intrinsic Value CalculatorWarren Buffett's discounted cash flow — a stock's intrinsic value from the cash it throws off.Graham Number CalculatorBenjamin Graham's fair-value ceiling from earnings and book value.PEG & PEGY Ratio CalculatorPeter Lynch's growth-adjusted value — is the price fair for the growth you're buying?Margin of Safety CalculatorThe gap between price and value — and the price to wait for.Reverse DCF CalculatorThe growth rate the market is already pricing in — is it realistic?

Educational Use Only · Not Financial Advice

Analysis, scores, valuations, and buy zones are derived from publicly documented investor frameworks (Buffett, Lynch, Benjamin Graham, Phil Town) for learning purposes only. They are not recommendations from licensed financial advisors. Past performance does not guarantee future results. Prices may be delayed up to 15 minutes. Always conduct your own research before making any investment decisions.