Discounted Cash Flow Calculator (DCF)
Company value from discounted future cash flows - the core model of fundamental valuation.
Also available in German: DCF-Rechner (Discounted Cash Flow) →
Inputs
Free cash flow (FCF)
Also called: Free cash flow
Where to find it: Cash-flow statement.
How to derive: Operating cash flow − capital expenditures (capex).
Growth rate
Also called: Growth per year
Where to find it: Analyst estimates or the company’s historical earnings/revenue growth.
How to derive: (value now ÷ value n years ago)^(1/n) − 1. Estimate conservatively!
Growth rate
Also called: Growth per year
Where to find it: Analyst estimates or the company’s historical earnings/revenue growth.
How to derive: (value now ÷ value n years ago)^(1/n) − 1. Estimate conservatively!
Terminal growth
Also called: Perpetual growth rate
Where to find it: An assumption — not in the filings.
How to derive: Long-run growth after the forecast phase. Cap near GDP growth (2–3%).
WACC (discount rate)
Also called: Weighted average cost of capital
Where to find it: Compute it yourself (CAPM) — or use our discount-rate calculator.
How to derive: Weighted mix of cost of equity (CAPM) and cost of debt. Rule of thumb: 8–10%.
Net debt
Also called: Net financial debt
Where to find it: Derivable from the balance sheet, often listed as a stat.
How to derive: Total debt − cash & equivalents. Negative = more cash than debt.
Shares outstanding
Also called: Share count
Where to find it: Stock overview page or balance-sheet notes.
How to derive: Market cap ÷ share price (as a rough check).
Share price
Also called: Stock price, market price
Where to find it: Any finance site (Google/Yahoo Finance) — the current trading price per share.
How to derive: Set by the market; just enter the current price per share.
Result, live
Two-stage model + perpetuity. Careful: results swing hard on WACC and terminal growth - that is why our calculator blends up to 26 models.
The DCF calculator estimates a stock's intrinsic value from its future free cash flows. You enter cash flow, growth and a discount rate, and it returns a fair value per share. Use it when you want to value a company with reasonably predictable cash flow.
How the formula works
The model projects free cash flow over ten years in two growth phases, discounts each year back to today, and adds a terminal value for everything beyond.
Terminal value = FCF₁₀ × (1+g) / (WACC − g) ÷ (1+WACC)¹⁰
Fair value = (enterprise value − net debt) / shares
Example: $1,000m FCF at a 9% discount rate: the ten years are worth about $9.0bn today, the terminal value roughly $11.0bn. Enterprise value ≈ $20bn, minus $2bn net debt = $18bn / 500m shares = $36.
How to read the result
- Upside above +10%: price sits below intrinsic value — potentially undervalued.
- −10% to +10%: near fair value, little safety cushion.
- Upside below −10%: the market pays more than the model justifies — expensive.
- Terminal value share above 70%: the value rests almost entirely on assumptions far in the future — treat with care.
What to watch out for
- WACC and terminal growth dominate: even one percentage point shifts the fair value dramatically.
- Terminal value often carries the day: more than 60% of the value can sit in the perpetuity — that is where the biggest risk lives.
- Garbage in, garbage out: a single strong FCF year is no basis; use a normalized, sustainable cash flow.
Worked example: from cash flow to fair value
Take a company with €100m free cash flow, 8% growth for 5 years, 2.5% terminal growth, a 9% discount rate (WACC), €50m net debt and 50m shares:
- Stage 1 (years 1–5): cash flows grow to 108 → 117 → 126 → 136 → 147m. Each is discounted by 1.09t → combined present value ≈ €478m.
- Terminal value: year-5 cash flow × 1.025 ÷ (0.09 − 0.025) ≈ €2,318m; discounted to today ≈ €1,507m.
- Enterprise value: 478 + 1,507 ≈ €1,985m − €50m net debt = €1,935m equity value.
- Per share: 1,935 ÷ 50 = €38.70 fair value.
Note that roughly three quarters of the value sits in the terminal value — which is why terminal growth and the discount rate are the two most powerful (and most dangerous) levers.
Taming sensitivity: the 2×2 rule of thumb
Instead of trusting ONE fair value, compute four: combine a cautious and an optimistic discount rate (e.g. 10% / 8%) with cautious and optimistic growth. If the price sits below all four results, the undervaluation is robust; if it sits in the middle, your assumption decides — then the output is a sensitivity statement, not a buy thesis.
- +1 point of WACC typically cuts fair value by 15–25%.
- −0.5 points of terminal growth acts similarly — both work through the terminal value.
- Hence: conservative defaults, and read upside as a margin of safety, never as a promise.
That is exactly how our Fair Value Calculator works, by the way: it runs 20 more models alongside the DCF and blends them conservatively — no single DCF output ever gets the final word.
Frequently asked questions
How do I pick the right discount rate (WACC)?
For stable blue chips, 8–10% is common; the riskier and more leveraged the firm, the higher. When in doubt, err on the conservative side and go higher.
Why does the result swing so much on small changes?
Because much of the value sits in the perpetuity and the denominator (WACC − g) is small. Tiny changes there loom large — so run several scenarios.
Where do I get free cash flow and net debt?
From the cash flow statement and balance sheet in the annual report. In our Fair Value Calculator they are already on file for 35,000+ stocks — no typing required.