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DCF calculator
A discounted cash flow model projects a company's free cash flow forward, discounts it back to today's dollars, and adds a terminal value for everything beyond the projection window. Enter your own assumptions below to get an intrinsic value per share and, if you add the current price, the margin of safety.
Enter free cash flow per share to see the intrinsic value.
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How to read the result
A DCF is only as good as its inputs. The growth rate, discount rate, and terminal growth rate are assumptions you're choosing, not facts — small changes to any of them can move the answer a lot, especially the terminal growth rate, since the terminal value is often more than half the total. Treat the output as one estimate among a range, not a precise price target.
If the intrinsic value is meaningfully above the current price, that gap is the margin of safety Benjamin Graham argued every purchase needs — room for your assumptions to be wrong and the investment to still work out. See the full method.
Questions
- What is a DCF (discounted cash flow) model?
- A DCF estimates what a company is worth today by projecting its future free cash flow, then discounting those future dollars back to present value at a rate that reflects risk and the time value of money. The sum of the discounted cash flows, plus a terminal value for everything beyond the projection window, is the intrinsic value.
- Where do I find free cash flow per share?
- Free cash flow (operating cash flow minus capital expenditures) is on the cash flow statement. Divide by diluted shares outstanding to get free cash flow per share, or use trailing twelve-month figures from any free financial data site.
- What discount rate should I use?
- Most analysts use something close to the company's weighted average cost of capital, typically 8-12% for a stable business and higher for riskier or smaller companies. The discount rate is the return you require to take on the risk of owning the stock — the higher the risk, the higher the rate.
- Why does the terminal growth rate matter so much?
- The terminal value — everything after the projection window — is often more than half of a DCF's total value, so small changes in the terminal growth rate swing the answer a lot. Keeping it at or below long-run GDP growth (roughly 2-3%) avoids assuming a company outgrows the entire economy forever.
- Is a DCF the same thing as the Graham number?
- No. The Graham number is a quick ceiling based on earnings and book value; a DCF is a full model built on projected cash flows and assumptions you choose yourself. Edge Thirteen's weekly screen starts with the faster Graham-style filter, then reads the 10-K on anything that clears it before calling it a value pick.
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