Free DCF tool
Intrinsic value calculator for stocks
This intrinsic value calculator runs a two-stage discounted cash flow (DCF) model on free cash flow per share. It shows where the value comes from and how much it moves when your assumptions change. Every figure is an estimate built on your own inputs.
Free DCF calculator for stocks (two-stage model)
Start from the company’s free cash flow per share, choose growth for two five-year stages, a terminal growth rate and the annual return you require. The estimate and the sensitivity table update as you type. This free online calculator runs entirely in your browser, so nothing you enter is stored or sent.
Estimated intrinsic value
92.95 per share
- Years 1–5, present value: 23.67 (25.5% of the total).
- Years 6–10, present value: 19.88 (21.4%).
- Terminal value, present value: 49.41 (53.1%), from 128.14 at year 10.
Margin of safety at a price of 80.00: 13.9%.
Sensitivity: discount rate and terminal growth
Rows change the terminal growth (g) by half a point, columns change the discount rate (r) by one point. Each cell is the estimated value per share; the center cell, in bold, is your base case.
| g ↓ / r → | r = 9.0% | r = 10.0% | r = 11.0% |
|---|---|---|---|
| g = 2.0% | 103.40 | 89.64 | 78.98 |
| g = 2.5% | 108.15 | 92.95 | 81.37 |
| g = 3.0% | 113.68 | 96.74 | 84.07 |
Estimate under assumptions, not a recommendation. The result depends entirely on the cash flow, growth and discount rates you enter; it is not a price target, a buy or sell signal or personalized advice. See the full disclaimer.
How the intrinsic value calculator works
A discounted cash flow (DCF) model, the method behind most stock valuation calculators, values a share as the sum of the cash it is expected to generate for its owners, with each future amount discounted back to today. This calculator uses a two-stage model on a per-share basis, the structure analysts often use for a first-pass valuation:
- Project free cash flow per share. Years 1 to 5 grow at your first-stage rate, years 6 to 10 at your second-stage rate: FCF in year t = FCF in year t−1 × (1 + growth).
- Discount each year. Present value = FCF in year t ÷ (1 + discount rate)t. At 10%, 1.00 received in year 10 is worth about 0.39 today.
- Add a terminal value. Beyond year 10 the model assumes constant growth forever (the Gordon growth formula): terminal value = FCF in year 10 × (1 + terminal growth) ÷ (discount rate − terminal growth). It is then discounted back ten years like any other cash flow.
- Add it up. Intrinsic value per share = present value of years 1 to 10 + present value of the terminal value.
- Compare with the price. Margin of safety = (intrinsic value − price) ÷ intrinsic value. A negative figure means the price already exceeds your estimate.
Working per share keeps the model simple and, with diluted shares, reflects dilution to date. It values the projected cash flows only: excess cash on the balance sheet is not included, and for heavily indebted companies part of the future cash flow will go to repaying lenders rather than to shareholders. Weigh both separately, along with future dilution from stock-based compensation.
Worked DCF example (hypothetical company)
The calculator’s default values describe a hypothetical company, not a real stock: free cash flow per share of 5.00, growth of 8% a year for five years and then 5% for five years, terminal growth of 2.5% and a 10% discount rate.
| Year | FCF per share | Discount factor at 10% | Present value |
|---|---|---|---|
| 1 | 5.40 | 0.9091 | 4.91 |
| 2 | 5.83 | 0.8264 | 4.82 |
| 3 | 6.30 | 0.7513 | 4.73 |
| 4 | 6.80 | 0.6830 | 4.65 |
| 5 | 7.35 | 0.6209 | 4.56 |
| 6 | 7.71 | 0.5645 | 4.35 |
| 7 | 8.10 | 0.5132 | 4.16 |
| 8 | 8.50 | 0.4665 | 3.97 |
| 9 | 8.93 | 0.4241 | 3.79 |
| 10 | 9.38 | 0.3855 | 3.62 |
| Terminal value (year 10) | 128.14 | 0.3855 | 49.41 |
| Intrinsic value per share | 92.95 |
The ten years of cash flow are worth 23.67 + 19.88 = 43.55 today. The terminal value at year 10 is 9.376 × 1.025 ÷ (0.10 − 0.025) = 128.14, or 49.41 today. The estimate is about 92.95 per share (rows are rounded), so a price of 80 leaves a margin of safety of about 13.9%.
More than half of the value, 53%, comes from the terminal value, that is from cash flows more than ten years away. That is normal for a DCF, and it is why the sensitivity table matters as much as the headline figure: in this example, the nine cells run from about 79 to 114 per share.
How to choose your DCF assumptions
Free cash flow per share
Take operating cash flow minus capital expenditure from the cash flow statement (the 10-K and 10-Q filings for US companies, free on SEC EDGAR) and divide it by diluted shares outstanding. Normalize it: average two or three years if working capital swings, and consider subtracting stock-based compensation, a real cost to shareholders even though no cash leaves the company.
Growth rates
Anchor the first stage to what the business has delivered and can fund: revenue and cash flow history, reinvestment needs and the size of its market. Let the second stage fade towards the growth of the economy. Very few companies grow free cash flow above 15% a year for a whole decade.
Discount rate
The discount rate is the annual return you require for the risk you take. Many investors use around 8% to 10% for large, stable US companies and more for small, cyclical or indebted ones. A common anchor is the cost of equity: the risk-free rate plus beta times an equity risk premium. In the example above, moving from 10% to 11% cuts the estimate by about 12%, and moving to 9% raises it by about 16%.
Terminal growth
Terminal growth applies forever, so it should not exceed the long-run growth of the economy; 2% to 3% is the usual range. The calculator refuses a terminal growth rate equal to or above the discount rate, because the formula then breaks down and gives an infinite or negative value.
Intrinsic value calculator in Excel or Google Sheets
Put FCF per share in B1 and the rates as decimals in B2 (stage 1), B3 (stage 2), B4 (terminal) and B5 (discount). List years 1 to 10 in A8:A17. In B8 enter =B1*(1+$B$2), in B9 =B8*(1+IF(A9>5,$B$3,$B$2)), and copy B9 down to B17. The present value of years 1 to 10 is =NPV(B5,B8:B17), the discounted terminal value =B17*(1+B4)/(B5-B4)/(1+B5)^10, and the intrinsic value is the sum of the two.
Limits of a DCF
- Garbage in, garbage out. The model is only as good as its growth and discount assumptions, and small changes compound over ten years.
- Terminal value dominance. It often makes up half or more of the result, and it rests on the least knowable part of the forecast.
- Not for banks and insurers. Their cash flows mix operating and funding activity, so free cash flow means little. Book value, earnings and return on equity work better.
- Negative or erratic cash flow. Young companies, turnarounds and heavy investors need explicit year-by-year forecasts, not two flat growth rates.
- Cyclical businesses. Starting from a peak-year cash flow overstates value; use a mid-cycle figure.
- Interest rates. When rates rise, required returns usually rise too, and companies whose value lies far in the future lose the most.
- Balance sheet. Excess cash, debt maturities and dilution sit outside this per-share shortcut.
Which stock valuation method should you use?
Stock fair value calculators usually rely on one of the methods below, and each answers a slightly different question.
| Method | Inputs | Useful for | Watch out for |
|---|---|---|---|
| Two-stage DCF (this page) | FCF per share, two growth rates, terminal growth, discount rate | Companies with positive, fairly predictable cash flow | Weight of the terminal value, choice of discount rate |
| Graham formula | EPS, expected growth, AAA bond yield | A quick test of the growth a price implies | Generous at high growth, ignores the balance sheet |
| Earnings multiple (the basis of our screener’s fair value estimate) | Positive EPS and a target multiple based on sector, profitability and risk | Ranking many companies on a consistent basis | General multiples miss company specifics |
Running two methods and studying the gap tells you more than trusting either one. Try the same company in the Benjamin Graham formula calculator.
From an estimate to a research decision
An intrinsic value estimate is one input in a research process, not its conclusion.
- Shortlist US-listed companies in the undervalued stock screener, ranked by research priority.
- Learn the full method in how to find undervalued stocks, and compare three valuation approaches in how to calculate the intrinsic value of a stock.
- See how we score valuation, quality, growth and risk on the methodology page.
- See how a thesis, a valuation range, scenarios and invalidation points fit together in our stock research reports.
Intrinsic value calculator: frequently asked questions
What discount rate should I use in a DCF?
There is no single right answer: it is the annual return you require for the risk. Many investors use around 8% to 10% for large, stable US companies and 10% to 12% or more for smaller, cyclical or indebted ones. A cost-of-equity estimate (risk-free rate plus beta times an equity risk premium) is a common starting point. Whatever you choose, check the sensitivity table to see how much the conclusion depends on it.
What terminal growth rate should I use?
Usually 2% to 3% a year, roughly long-run inflation plus real economic growth. Terminal growth applies forever, so it should not exceed the growth of the economy, and it must stay below your discount rate. In the default example, half a point of terminal growth moves the estimate by about 3.5% to 4%; the sensitivity table shows the effect for your own inputs.
Why look at a range instead of one number?
Because every input is uncertain. In the default example, one point on the discount rate moves the estimate by 12% to 16%, and the nine cells of the sensitivity table run from about 79 to 114 per share for the same company. A range is a more honest summary than one figure with two decimals.
Can I use it for European stocks?
Yes. The calculator works in any currency, as long as free cash flow per share and the price are in the same one. Pick a discount rate consistent with that currency’s interest rates and the company’s risk. Our screener and research reports cover US-listed stocks, but the arithmetic is the same everywhere.
Where do I find free cash flow per share?
In the cash flow statement of the annual or quarterly report: operating cash flow minus capital expenditure, divided by diluted shares outstanding. For US companies, the 10-K and 10-Q filings are free on SEC EDGAR.
Is the result a price target?
No. It is an estimate under the assumptions you entered, not a forecast of where the share price will go, not a buy or sell signal and not personalized advice. Market prices can stay far from any intrinsic value estimate for years.
Put the calculator to work on real companies
Shortlist US-listed stocks with the undervalued stock screener: its public preview is free, delayed by at least 24 hours and limited to 8 rows. Members get full access, plus research reports with intrinsic value ranges, scenarios and invalidation points.
Version française : calcul de la valeur intrinsèque d’une action.