This page contains a discounted cash flow calculator with a special feature: it includes financials for over 2,000 American publicly listed stocks. You can populate financials on your choice of ticker without even leaving DQYDJ.
While the calculator is built to allow a Discounted Cash Flow Analysis without a stock lookup, you’ll get the most out of it using the ticker lookup feature. Using Sharadar data (via Quandl), we can pull in annual financial reports for 2,000+ tickers. Enter a ticker in the lower form, populate the stock fundamentals, make changes to the assumptions, and run a stock valuation!
Discounted Cash Flow Calculator with Automatic Fundamentals
Note: Valuations produced by this calculator are for informational use only and should not be taken as advice to trade or hold any individual securities. Do your own due diligence on inputs and valuations.
Using the Automatic Discounted Cash Flow Calculator
The discounted cash flow stock valuation calculator is relatively straightforward but allows customization with a few advanced options. By default, it uses Earnings per Share to run valuations; expanding the Advanced Options tab allows you to use Free Cash Flow instead.
Stock DCF Base Parameters
- Current Stock Price – The most recent trading price for the stock. This may be up to a week out of date (see the methodology on the Stock DCF Calculator).
- Discount Rate (%) – Return you could earn on another security, sometimes called the ‘guaranteed return’ (even if not guaranteed!).
- Earnings Per Share ($) – The 12 month, or annual, dollars earned in profit per share of stock.
- Earnings Growth (%) – The annual rate of growth you expect for earnings per share, in the near term.
Advanced Options (Optional)
- Free Cash Flow Per Share ($) – The 12 month, or annual, dollars of free cash flow per share of stock. Optional – used if DCF Type you choose Free Cash Flow.
- Free Cash Flow Growth (%) – The annual rate of growth you expect for free cash flow, in the near term. Optional – used if DCF Type you choose Free Cash Flow.
- Years of Above Growth – The number of years to use near term growth numbers. We conservatively suggest 5 or fewer.
- Perpetual Growth (%) – The perpetual growth in EPS or FCFPS after the near term growth ends.
- DCF Type – Use either earnings per share or free cash flow per share to value a stock.
- Ticker Symbol – Ticker symbol for the publicly traded stock to look up. The tool includes over 2,000 companies; you can find more information with Sharadar. Note that fundamentals come from the last annual report filed by a company, so may be nearly a year old. Change whatever fields you feel necessary to create a proper valuation.
Discounted Cash Flow Valuation Output
- Discounted Cash Flow (DCF) / Calculated Fair Value – Estimated fair value per share using the input assumptions.
- Over / Under Value Percentage – Shows the percentage a stock is over or underpriced after computing a valuation.
How to Use a Discounted Cash Flow Analysis
Discounted cash flow analysis is a common technique to determine the contribution to present value of future cash flows. While used often in many aspects of business to set strategy, it’s also a useful analysis for evaluating investment choices.
The key to a good analysis – like in most types of analysis (!) – is to pick good projections going forward. While you can often get very good estimates of current conditions, setting the discount rate and earnings growth rate are as much art as science. Those numbers are also quite exploitable; by moving the levers on them you can justify almost any current stock evaluation – so make sure you can defend your assumptions.
Discount rate is the so-called “price in a vacuum”, or price you could achieve executing your default investment strategy. If you would fall-back to an index fund, you would enter your expected return on that fund – perhaps 10% annually. To set a good number, take a look at our S&P 500 Historical Return Calculator which shows trailing returns.
Earnings growth is the annual rate at which earnings (or free cash flow) can be increased. In theory, future earnings belong to the shareholder; in that vein earnings growth adds to the present valuation as it predicts future earnings. By default, the tool computes 5 years of high-growth earnings before falling back to a lower perpetual number; set your assumptions in the ‘Advanced Options’ tab.
DCF: One Aspect of Your Stock Valuation Due Diligence
A discounted cash flow analysis is one of the methods I use when evaluating stocks for my own portfolio. You should always approach your investment decisions holistically – a good DCF reading shouldn’t be the only signal that you should own a stock. Many reasons exist that might cause a disconnect – regulatory and legal burdens, bad news, new competition, and a myriad of other reasons might cloud (or pump) a stock’s price.
Still, it’s good practice to run a DCF analysis on your portfolio (and when looking to add to the portfolio!). Who knows; maybe some stocks you’re evaluating are cheaper than others? There’s only one way to find out – use this tool in good health!