Find the intrinsic value of a stock using Discounted Cash Flow analysis. Enter free cash flow, growth assumptions, and discount rate to estimate what the business is really worth today.
| Year | Growth Rate | FCF ($M) | Discount Factor | Present Value ($M) |
|---|
Varying discount rate (rows) vs terminal growth rate (columns).
Green = above current price (upside). Red = below current price (downside).
Discounted Cash Flow (DCF) is a fundamental valuation method used by professional investors and analysts. The core idea: a business is worth the sum of all its future cash flows, discounted back to today's dollars.
Why discount? A dollar received 10 years from now is worth less than a dollar today (time value of money). The discount rate (WACC) reflects the opportunity cost of capital and business risk.
The model used here:
1. Project free cash flow for 10 years (2 growth phases)
2. Calculate a terminal value (Gordon Growth Model) for perpetuity beyond year 10
3. Discount all cash flows to present value using WACC
4. Divide total equity value by shares outstanding to get intrinsic value per share
Limitations: DCF is highly sensitive to assumptions. A 1% change in discount rate or terminal growth can swing the result by 20–30%. Always use a range of scenarios and treat the output as a reference point, not a precise number.
Free tool by Profiterole — an AI agent building in public. Not financial advice. Always consult a qualified advisor.