DCF Calculator
Estimate a stock's intrinsic value using a two-stage Discounted Cash Flow model. Set your EPS, growth assumptions, and WACC — the calculator projects 10 years of earnings and discounts them to present value.
Value = Σ [EPSn / (1+WACC)n] + PV(Terminal Value)
Inputs
Analyze a stock →TTM EPS from the income statement. Must be positive.
High-growth phase. Typical range: 8–25%.
Tapering phase. Should be lower than years 1–5.
Perpetuity rate. Typical: 2–3% (nominal GDP).
Required return. US large-cap: 8–12%.
Discount applied to intrinsic value.
Intrinsic Value
$168.39
DCF estimate — mathematical output based on your inputs
Attractive Entry Below
$134.71
Intrinsic value × (1 − 20.00% MoS)
PV Stage 1
$29.44
Years 1–5
PV Stage 2
$31.79
Years 6–10
PV Terminal
$107.15
63.63% of value
Terminal Value
$253.67
Pre-discount (yr 10+)
Value Composition
Year-by-Year EPS Projection
| Year | Phase | Projected EPS | Discounted Value |
|---|---|---|---|
| 1 | Stage 1 | $5.75 | $5.2752 |
| 2 | Stage 1 | $6.6125 | $5.5656 |
| 3 | Stage 1 | $7.6044 | $5.872 |
| 4 | Stage 1 | $8.745 | $6.1952 |
| 5 | Stage 1 | $10.0568 | $6.5362 |
| 6 | Stage 2 | $10.8613 | $6.4763 |
| 7 | Stage 2 | $11.7302 | $6.4168 |
| 8 | Stage 2 | $12.6687 | $6.358 |
| 9 | Stage 2 | $13.6821 | $6.2996 |
| 10 | Stage 2 | $14.7767 | $6.2418 |
| TV | Terminal | — | $107.15 |
| Intrinsic Value (Sum) | $168.39 | ||
Apply DCF to real stocks
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Formula reference
The exact formula this calculator uses to compute Discounted Cash Flow (2-stage EPS).
Intrinsic Value = Σ EPSₜ ÷ (1 + WACC)ᵗ (t = 1…10) + PV(Terminal Value)Stage 1 (t = 1…5): EPSₜ = EPS₀ × (1 + g₁)ᵗStage 2 (t = 6…10): EPSₜ = EPS₅ × (1 + g₂)ᵗ⁻⁵Terminal Value = EPS₁₀ × (1 + g∞) ÷ (WACC − g∞)EPS₀Current trailing earnings per shareg₁Stage-1 (years 1–5) growth rateg₂Stage-2 (years 6–10) growth rateg∞Terminal (perpetual) growth rateWACCDiscount rate (weighted average cost of capital)- Discounts a decade of projected earnings plus a perpetual terminal value back to today.
- The terminal value often dominates, so the result is sensitive to the gap (WACC − g∞).
- Requires WACC > g∞, or the terminal value is undefined.
Educational reference only — not investment advice. See the glossary for plain-English definitions of each term.
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How the DCF model works
Understanding the mechanics behind discounted cash flow analysis.
Stage 1 — Years 1–5
EPS grows at your near-term rate each year. Each year's earnings are discounted by (1 + WACC)n to get present value. High-growth companies typically see their highest EPS expansion here.
Stage 2 — Years 6–10
Growth tapers to your long-term rate. This reflects the natural slowdown as companies mature and competition increases. Year 5 EPS compounds forward at the slower rate.
Terminal Value
After year 10, earnings are assumed to grow at the terminal rate in perpetuity. The Gordon Growth Model formula — EPS10 × (1 + g) / (WACC − g) — captures this. Terminal value typically represents 60–80% of total intrinsic value.
When DCF is most and least accurate
Most reliable
- Mature companies with stable, predictable earnings
- Businesses with consistent EPS growth history
- Capital-light models with high earnings conversion
- Dividend payers with long track records
Least reliable
- Early-stage or pre-profit companies (negative EPS)
- Cyclical businesses with volatile earnings swings
- Companies undergoing major restructuring
- When discount rate ≈ terminal growth rate
Frequently asked questions
Common questions about DCF analysis and how to use this calculator.
A Discounted Cash Flow (DCF) calculator estimates the intrinsic value of a stock by projecting its future earnings and discounting them back to present value. The core principle: money earned in the future is worth less than money earned today, because of the time value of money and investment risk. By discounting projected earnings at a required rate of return (WACC), you get a present-value estimate of what a share should be worth.
DCF accuracy depends entirely on input quality. Small changes to growth rate, discount rate, or terminal growth rate can shift the output by 20–50%. Think of the result as a plausible range, not a precise price target. Run the model under conservative, base, and optimistic assumptions to understand the value band. No DCF output should be treated as a definitive fair value — it's a structured research estimate.
Terminal value captures all earnings beyond the explicit 10-year projection period. In most DCF models, terminal value accounts for 60–80% of total estimated intrinsic value. This is mathematically correct: most of a company's long-run earning power lies beyond a 10-year window. It also means the terminal growth rate assumption has the largest single impact on the result. A difference of 1% in the terminal rate can shift intrinsic value by 20–30%.
DCF outputs are mathematical estimates based on user inputs, not investment advice. All results depend entirely on the assumptions you provide — small changes to growth rate, WACC, or terminal growth can shift the output significantly. This tool is for research and educational purposes only. Equity Rank is not a registered investment adviser. Consult a qualified financial professional before making investment decisions.
Go deeper: multi-method valuation
No single model captures fair value. Triangulate with DCF, Graham Number, Margin of Safety, and asset-based methods to build a complete valuation picture.
Learn more about how Equity Rank weights these models in the methodology or browse the full free tool directory. Still have questions? See the FAQ.
Read the method behind this calculator
Each explainer walks through the formula, the inputs it needs, and the cases where it stops being informative.
More write-ups in the blog, or see how the models are weighted in the methodology.