Use this Online Discounted Cashflow DCF Calculator to calculate the fair value of a stock.
📈 Discounted Cash Flow (DCF) Calculator
Estimate the fair value of a stock using the classic DCF method by entering expected annual cash flow, growth rate, and a suitable discount rate. This method brings future cash flows back to present value.
💡 Discount Rate (WACC) Calculator
The Weighted Average Cost of Capital (WACC) is used as the discount rate in DCF models. It reflects the average rate a company is expected to pay to finance its assets. Below you can estimate it yourself.
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How to Use the DCF Fair Value Calculator:
Paste earnings per share (EPS or earnings per share) and sales growth in this Discounted Cashflow DCF Calculator and get the DCF true value of the stock (fair value). Earnings per share and sales growth can be found via a Google search, in the annual report on the company’s website under “Investors Relations”, or on relevant stock portals.
In our Premium Tool, a large number of different evaluation models are used and the required data is loaded automatically.
Discounted Cashflow Valuation: A Calculator for Everyone.
When it comes to investing in stocks, one of the most important factors to consider is a company’s value. This can be difficult to determine, especially for individuals who may not have a background in finance. However, by understanding the basics of discounted cash flow (DCF) valuation, you can gain a better understanding of a company’s worth and make more informed investment decisions.
What is Discounted Cash Flow Valuation?
Discounted cash flow (DCF) valuation is a method used to determine the value of an investment by estimating the future cash flows it is expected to generate, and then discounting those future cash flows to their present value. This allows investors to determine the present value of a company’s future earnings, taking into account the time value of money. In simpler terms, DCF valuation allows you to determine how much money a company is expected to make in the future, and then adjust that amount based on how far into the future those earnings are expected to occur. This method can be used to value any investment, including stocks, real estate, and bonds.
How does DCF Valuation work?
DCF valuation is based on two key components: the company’s future cash flows and the discount rate. The future cash flows represent the expected earnings of the company over a certain period of time, typically 5 to 10 years. The discount rate, on the other hand, represents the cost of capital, or the rate of return an investor would expect from a similar investment. (Note: In this calculator we have used average values to make the calculator easier to use.)
The future cash flows are then discounted by the discount rate, which allows us to calculate the present value of those cash flows. This present value is then used to determine the value of the investment, which can be compared to the current market price to determine if the investment is overvalued or undervalued.
💬 Comment by Dr. Peter Klein, Founder of Fairvalue Calculator:
The DCF (Discounted Cash Flow) method is a true classic among stock valuation models and still one of the most commonly used approaches today. It goes back to financial pioneers like John Burr Williams and later found widespread popularity thanks to Warren Buffett.
The key idea is to discount all future expected cash flows back to the present using a discount rate. This rate represents the risk and opportunity cost of the investment. That means: the more uncertain or aggressive the projections, the higher this rate should be.
When looking at the various fair value calculators, one thing becomes very clear: there is no single “correct” or “true” fair value. Every method gives a different result based on its assumptions. That’s why I personally take the average of several models — just like the concept of swarm intelligence or a Gaussian distribution, this combined value often gets closest to reality.
In our Premium Tool, we automatically calculate multiple valuation models and compute not just the arithmetic and geometric mean, but also the median — weighting more reliable models more heavily. Our AI also contributes to the result in the background. Sure, you could do all of this manually. But honestly, for just a few euros per month… 🤷♂️😉
👉 Learn more about Fairvalue Calculator, our vision, and me.
Discounted Cashflow DCF Formula and example:
For example, let’s say a company is expected to generate $100 in cash flows (CF) each year for the next five years, and the discount rate (r) is 10%. The present value of these cash flows would be calculated as follows:
- $100 / (1 + 10%) = $90.91 (present value for year 1)
- $100 / (1 + 10%)^2 = $82.64 (present value for year 2) $100 / (1 + 10%)^3 = $75.13 (present value for year 3)
- And so on, until all five years have been discounted.
The present value of all five years of cash flows would then be added together to determine the total present value of the investment.
Why use DCF Valuation?
DCF valuation is a useful tool for investors because it provides a more accurate picture of a company’s true value compared to other methods, such as price-to-earnings (P/E) ratios or market capitalization. DCF valuation takes into account a company’s expected future earnings, which can be a more reliable indicator of value than current market prices. Additionally, DCF valuation is useful for investors who are looking to make long-term investments, as it allows them to see how much a company is expected to grow and earn over a period of years, rather than just a snapshot of its current market price.
Conclusion Discounted Cashflow:
In conclusion, DCF valuation is a valuable tool for investors who are looking to determine the true value of a company and make informed investment decisions. While it may seem complicated at first, with a basic understanding of the concept and a little practice, anyone can use DCF valuation to evaluate potential investments.
It’s difficult to determine an exact “fair value” for every stock as it depends on various factors including the company’s future financial performance, competition, market conditions and more. DCF valuations can provide an estimate of “fair value” by calculating the company’s future expected cash flows and then discounting them to today’s value.
However, it is important to note that estimates of future cash flows and the discount rate involve uncertainties that may lead to inaccurate estimates of fair value. It’s also important to note that “fair value” is an estimate only and may not necessarily match the actual market value of the stock. A stock’s market valuation is determined by supply and demand in the market, and can change based on factors such as news, market trends, and more. With that in mind, it’s important to conduct comprehensive due diligence before investing in any stock, including reviewing the company’s financial performance, competitive landscape, industry trends, and more.
In our Premium Tools we combine 12 different valuation models and combine than with our own estimates to present fair values to more than 45.000 stocks. These estimates are more precise than only counting on one valuation method.
FAQ: DCF Cash Flow Calculator
Model free cash flows, choose a sensible discount rate, set a prudent terminal value and translate into fair value per share.
What does this DCF Calculator do?
FCFF or equity cash flow—what does the tool use?
Which inputs matter most for fair value?
- Revenue growth and margin trajectory.
- Reinvestment: CapEx and working capital needs.
- Discount rate or WACC and the terminal value method.
- Share count and potential dilution.
How should I choose WACC or a required return?
Terminal value: perpetual growth or exit multiple?
How do I model CapEx and working capital properly?
- Separate maintenance from growth CapEx where possible.
- Tie Δ working capital to sales using days metrics.
- Cross check depreciation and asset life for realism.
How are taxes, leases and other EV items handled?
How do I deal with cyclicality and one off items?
Scenarios and sensitivity—how should I set them up?
- Base: mid cycle growth and margins, normalized reinvestment.
- Bear: slower growth, lower margins, higher discount rate.
- Bull: prudent upside on growth or efficiency.
How do I read the output and set a Margin of Safety?
Common mistakes to avoid in DCF models
- Mixing TTM and forward inputs inconsistently.
- Overly aggressive terminal growth or exit multiple.
- Ignoring dilution and capital structure when reconciling to equity.
- Not cross checking with EV based multiples and sector context.
What is a practical workflow with the DCF and other tools?
- Context: Check market and sector levels.
- Screen: Build a shortlist with the Stock Screener.
- Model: Run this DCF and compute clean EV.
- Review: Combine signals on Stock Valuation.
- Allocate: Size and rebalance in the Portfolio Manager.
