A DCF calculator with every assumption in view
The Valuation tab of Kereon's Investing page models what a company's future free cash flow is worth today. Seven assumptions drive it, every one of them on screen and yours to move, and the implied value sits next to the company's multiples against its sector and its own history. It is never a price target.
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How the model works
A discounted cash flow forecasts the free cash flow a business will produce, discounts each year back to today at a required rate of return, adds a terminal value for everything after the forecast, takes away net debt and divides by the shares outstanding. The answer is an implied value per share: what the business is worth if the assumptions hold.
Kereon forecasts revenue and the share of it that becomes free cash flow, starting from the analysts' revenue estimate and the reported margin, and fills each assumption with a starting value you can see. Move growth, the margin, the discount rate or the terminal rate and the implied value follows; bear and bull cases and a grid across discount and terminal rates show how much the answer depends on them.
A valuation is more than one number
A DCF is only as good as its inputs, so the same tab shows every multiple, price to earnings, EV to EBITDA, price to sales, free cash flow yield and more, against the sector's median and against the company's own range over the years. A cheap multiple next to a demanding DCF, or the other way round, is the question worth asking.
Questions
What is a DCF calculator?
A DCF (discounted cash flow) calculator estimates what a company is worth today from the free cash flow it is expected to produce, discounted back at a required rate of return, plus a terminal value for the years after the forecast.
What assumptions does Kereon's DCF use?
Seven, each shown with its starting value and each yours to change: revenue growth in the first and the final year, free cash flow margin in the first and the final year, the discount rate, the terminal growth rate and the number of forecast years.
Is the implied value a price target?
No. It is what the business would be worth if your assumptions held. Kereon sets no price target and recommends no security.
Does the DCF work for every company?
No. It is not applied to banks and insurers, whose cash flow does not mean the same thing, and it is refused when there is no revenue, when final-year cash flow is negative or when the discount rate is not above terminal growth.
Where does the cash-flow data come from?
From the company's reported statements: its SEC filings and third-party market data, which may be delayed.