Free DCF Calculator
Estimate a company's intrinsic value per share with a two-stage discounted cash flow model. Adjust growth, discount rate, and buybacks and see the value update as you type.
The estimate sits 11% below the current price on these assumptions.
How a two-stage DCF works
A discounted cash flow model values a business as the sum of the cash it will generate for its owners, with each future year marked down to what it is worth today. This calculator splits the future into three parts. Years one to five grow at your first rate. Years six to ten grow at a second, usually lower rate as the business matures. After that, a terminal value captures everything from year eleven onward, assuming a steady terminal growth rate forever.
Every projected year is discounted at your required rate of return, so cash far in the future counts for less than cash next year. Add it all up and you get an intrinsic value per share. If you expect the company to buy back stock, the buyback rate shrinks the share count each year, which lifts per-share cash flow.
How to use this calculator
- Enter the company's free cash flow per share. Take free cash flow (operating cash flow minus capital spending) and divide by shares outstanding.
- Set a growth rate for the first five years based on the company's recent record and what looks sustainable.
- Set a lower growth rate for years six to ten, and a conservative terminal rate, often near long-run economic growth.
- Set your discount rate to the annual return you require, then read the intrinsic value and the margin of safety against the price.
A worked example
Say a company earns $5.00 of free cash flow per share. You expect 8 percent growth for five years, 4 percent for the next five, then 2.5 percent forever, and you require a 10 percent return. The calculator projects each year, discounts it, adds a terminal value, and returns an intrinsic value per share. Trade by trade, nudge the growth rate down a few points and watch how much the value falls. That sensitivity is the real lesson: the output is a range, not a verdict.
Assumptions and limits
A DCF rewards honest inputs and punishes wishful ones. The model needs the discount rate to stay above the terminal growth rate, or the math has no finite answer. Free cash flow has to be positive for the result to mean anything. Because small changes in growth and discount rate swing the value, use the calculator to test a range of assumptions rather than to defend a single price target.
Frequently asked questions
- What is a discounted cash flow model?
- A discounted cash flow (DCF) model estimates what a business is worth today by projecting its future cash flows and discounting them back to the present at a required rate of return. The idea is simple: a dollar earned in ten years is worth less than a dollar earned today, so future cash has to be marked down before you add it up.
- What inputs does this DCF calculator need?
- Free cash flow per share to start, a growth rate for years one to five, a second growth rate for years six to ten, a terminal growth rate for the years after that, a discount rate (your required return), and an optional annual buyback rate. The calculator handles the present-value math and the terminal value for you.
- What discount rate should I use?
- The discount rate is the annual return you require to hold the stock. Many long-term investors use a figure in the range of 8 to 12 percent. A higher discount rate lowers the intrinsic value, so it acts as your built-in caution. Set it to the return you would actually need, not the lowest number that makes the stock look cheap.
- Is a DCF accurate?
- A DCF is only as good as its inputs. Small changes in growth or discount rate move the output a lot, so treat the result as a range rather than a single precise number. Use it to understand what the price already assumes, then check those assumptions against the company's actual history.
This calculator is for education and research only. It is not investment advice and it does not recommend buying or selling any security. The output depends entirely on the assumptions you enter.