Discounted Cash Flow Calculator
I created this free DCF calculator to help you find the true intrinsic value of any stock. Stop guessing and start investing with confidence.
Fair Value Calculator (DCF Method)
Input Parameters
The company's most recent annual free cash flow
Expected annual FCF growth rate during projection period
Perpetual growth rate after projection period (typically 2-3%)
Weighted Average Cost of Capital (WACC)
Number of years to project (typically 5-10 years)
Total number of outstanding shares
Results
Enter your parameters and click "Calculate Fair Value" to see results
Discounted Cash Flow (DCF) Calculator in 3 Simple Steps
The DCF model might sound complex, but I've boiled it down to three essential steps:
Step 1: Estimate Future Cash Flows
First, I need to project how much cash the company will generate in the coming years. I look at their Free Cash Flow (FCF) and estimate a reasonable growth rate based on their past performance and future prospects.
Step 2: Determine Discount Rate
Next, I figure out the Discount Rate (often the WACC). This is basically the "risk factor." A riskier company needs a higher discount rate, which lowers the value of those future cash flows today.
Step 3: Calculate Present Value
Finally, I discount all those future cash flows back to today's dollars and add them up. This gives me the Intrinsic Value. If the stock price is lower than this number, I've found a potential bargain!
Why I Use a Discounted Cash Flow Calculator
In my investing journey, I've found that the market is often irrational. Prices swing wildly based on news and emotions. That's why I rely on the Discounted Cash Flow (DCF) method. It grounds me in reality.
Instead of asking "What will someone else pay for this stock?", I ask "How much cash will this business generate for me?". That's the core of value investing.
How My DCF Calculator Works
I designed this tool to be powerful yet user-friendly. You input the key drivers of value—Free Cash Flow, Growth Rate, and Discount Rate—and it does the heavy lifting. It calculates the present value of projected cash flows for the next 5-10 years, plus a "Terminal Value" for everything after that.
The result is a clear Fair Value per Share. It's not a magic number, but it's a fantastic starting point for deeper analysis.
A Note on Assumptions
Garbage in, garbage out. That's the golden rule of DCF models. If I assume a company will grow at 50% forever, the calculator will tell me it's worth trillions. But that's not realistic. I always try to be conservative. I'd rather be pleasantly surprised by a company's performance than disappointed.
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Common Questions
Frequently Asked Questions
Here are the answers to the most common questions I get about DCF valuation.