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DCF Calculator: Intrinsic Value of a Stock
Estimate what a company is worth with a two-stage discounted cash flow (DCF) model. Load real numbers for any ticker, then adjust the assumptions.
How a DCF works
A discounted cash flow model estimates the present value of all the free cash flow a business will generate. It projects cash flows for ten years, adds a terminal value for the years beyond, and discounts everything back to today at your required rate of return (the discount rate).
Choosing your assumptions
Small changes in growth and discount rates move the result a lot, especially through the terminal value. Try conservative, base and optimistic cases. A margin of safety, buying below your estimate of intrinsic value, helps protect against mistakes in your assumptions.
How to use this DCF calculator
Type a ticker to load the company's latest free cash flow, cash, debt, shares outstanding and share price, or enter your own figures in millions. Then set three growth assumptions (years 1 to 5, years 6 to 10 and terminal growth after that) and a discount rate. The calculator projects ten years of free cash flow, adds a terminal value, discounts everything to today and converts it into an intrinsic value per share, showing the upside or downside versus the current price.
Choosing your assumptions
Growth: base early growth on the company's recent free cash flow trend and analysts' expectations, then step it down for years 6 to 10, since few companies sustain fast growth for a decade. Terminal growth is usually 2% to 3%, roughly the long-run growth of the economy. Discount rate: many investors use 8% to 10% for large, stable companies and higher rates for riskier ones.
Small changes in these inputs move the result a lot, especially the discount rate and terminal growth. Treat the output as a range: run a pessimistic, base and optimistic case, and look for a margin of safety before acting on any estimate. DCF works best for companies with steady, positive free cash flow and poorly for early-stage, loss-making or highly cyclical businesses.
Related guides
Intrinsic value and DCF explained · What is free cash flow? · How interest rates affect stocks · The P/E ratio · How to analyze a stock
Frequently asked questions
What discount rate should I use?
Many investors use 8% to 10% for large, stable companies and higher rates for smaller or riskier businesses. It should reflect the return you require for the risk.
Why is the terminal value so large?
Most of a healthy company's value comes from cash flows far in the future. That is why the terminal growth rate should stay modest, typically at or below long-run economic growth.
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