Reverse DCF calculator
What growth rate is the share price already assuming?
Fill it from a company
Illustrative inputs
What one share costs today. This is the number being explained.
The latest annual figure, for the whole company. Filed: operating cash flow less capital expenditure.
Total debt less cash, from the balance sheet. Filed. Negative means net cash.
How long the implied rate is assumed to run before it fades to the perpetual rate. Yours.
The return you require. Yours, and it moves the answer more than anything else here.
Growth after the forecast, for ever. Yours. It has to stay below the discount rate.
Implied growth
+6.9%
a year in free cash flow, for 10 years, to justify the price. Whether that is believable is your call.
Show the working
| Step | Value |
|---|---|
| Free cash flow per share | 5 |
| Net debt per share | 10 |
| Net cash per share, the floor this model cannot go under | -10 |
| Value per share at the implied rate, against the price | 100 |
| Implied annual growth in free cash flow | +6.9% |
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How it works
Solve g: sum of FCF0 x (1+g)^t / (1+r)^t + TV / (1+r)^N = price x shares + net debt
- The same two-stage model as the DCF calculator, with the growth rate as the unknown.
- Value rises with g when cash flow is positive, so the rate is found by halving the range.
- Filed: free cash flow, shares, net debt. Chosen: forecast years, discount rate, perpetual growth.
Reading the result
The line is free cash flow per share compounding at the implied rate. A rate is abstract; the amount it reaches by the last forecast year is the thing to have an opinion about.
On the illustrative inputs the price implies +6.9% a year, which takes free cash flow per share from 5.00 to 9.75 over ten years.
Questions
What is a reverse DCF?
A discounted cash flow solved backwards. Instead of assuming a growth rate and producing a value, it takes the price the market is already printing and produces the growth rate that reproduces it. The answer is not a valuation; it is a statement of what somebody paying today has to believe.
Why does it sometimes print n/a instead of a rate?
Because sometimes there is no rate. A company whose free cash flow is negative has none at any price: growing a negative number never reaches a positive value. A price at or below net cash per share has none either, because the model never values a business below the cash on its balance sheet. Printing 0% in either case would invent a number, and 0% is a very specific claim.
Can the implied rate be negative?
Yes, and it often is. A negative rate means the price is assuming the cash flow shrinks. That is a finding rather than a fault: it is what the market is paying for, and disagreeing with it is a position.
Which inputs are filed and which are mine?
Free cash flow, the diluted share count and net debt come off the statements. The forecast length, the discount rate and the perpetual growth rate are yours, and the discount rate moves the answer more than anything else on the page.
Is this the same solver the research product uses?
Yes. This page runs the same engine as the paid DCF workbench, so the same inputs give the same implied rate in both.
What this leaves out
- A single rate across the whole forecast, where a real business fades.
- Everything after the forecast is one perpetual rate, and it carries most of the answer.
- The implied rate is only as meaningful as the discount rate it was solved under, which is yours.
- It says what the price assumes, never whether the price is right.
Next step
An implied growth rate is an assumption somebody is paying for. Name a company and this site drafts three numbers from its own filed figures and re-tests them the night new accounts arrive.
The arithmetic runs in your browser, so the numbers you type never leave it. A ticker in the address is read on this site to look the company up, and goes nowhere else. Disclaimer.