A discounted cash flow valuation answers one question: what is a company worth today, based on the cash it will produce in the future? This calculator opens Stock Valuation Studio already set on the discounted cash flow model. Enter any US ticker and the Studio builds the complete workup from the company filings, with no sign-up and no charge.
What the DCF Model Is
A business is worth the cash it will hand its owners over its life, and a dollar promised ten years from now is worth less than a dollar today. The DCF model turns that idea into arithmetic. It projects the company free cash flow year by year, converts the whole stream into today dollars with a discount rate, and divides by the share count. What comes out is a fair value per share that can be set beside the market price.
The Studio runs the model in two stages. Free cash flow grows at a first-stage rate for five years, the rate that the record supports, anchored to the stronger of the analyst forward estimate and the median growth of the company's own recent years. Growth then fades across the second five years toward a perpetual rate of three percent, the long-run pace of the economy itself. Each year is discounted back at the rate set on the Assumptions card, nine percent unless you choose the computed weighted average cost of capital or enter your own rate.
The Formula
The model in full, exactly as the Studio computes it:
Free cash flow to firm is the cash flow belonging to the whole firm: operating cash flow minus capital spending, plus after-tax net interest (interest paid less interest income, after tax). Net cash is cash and short-term investments minus total debt, and it is added because a buyer of the whole company would receive it. A company with more debt than cash subtracts instead.
A Worked Example: Apple
The Studio read Apple from its filings on October 27, 2026, when the price stood at $342.58. The trailing twelve months of free cash flow to firm came to $136,728 million, or $9.37 per share, and the record supported a first-stage growth rate of 9.3 percent, fading to 6.1 percent across the second stage. The discount rate was the workbook rate of 9.0 percent.
| Input | Value |
|---|---|
| Base free cash flow to firm (trailing twelve months) | $136,728 million |
| First-stage growth, years one to five | 9.3% |
| Second-stage growth, years six to ten | 6.1% |
| Perpetual growth after year ten | 3.0% |
| Discount rate | 9.0% |
| Net cash | $48,453 million |
| Shares outstanding | 14,594,180,000 |
The projection discounts to $1,329.0 billion in present value. The terminal value, the worth of every year after year ten, discounts to $2,079.5 billion. Together they give an enterprise value of $3,408.5 billion. Adding net cash of $48.5 billion gives an equity value of $3,456.9 billion, and dividing by the share count prints a fair value of $236.87 per share. The terminal value carries 61.0 percent of the enterprise value, which is normal for a healthy growing company, and it is the first thing to look at when a DCF result surprises you.
Against the price of $342.58, the margin of safety printed at negative 44.6 percent and the verdict read Overvalued. The model was not saying Apple is a poor business. It was saying the price had already paid for more growth than the filed record supports.
When the DCF Fits, and When It Does Not
Best for companies with positive free cash flow and a record long enough to anchor a growth rate: established manufacturers, software firms, retailers, payment networks, and most mature businesses. The longer and steadier the cash record, the more the projection has to stand on.
Not for banks and insurers. For a financial company, cash flow is the raw material rather than the product, and a projection of it says little. The better tools price what those companies earn and what they own: the multiples model, the residual income model, and the justified price-to-book model.
Not for real estate investment trusts. A trust distributes most of what it earns, and its cash flow statement understates the economics. The better tool is the multiples model in its funds from operations form, which prices the trust on funds from operations per share.
Not while free cash flow is negative. A projection needs a positive base, and the model reports that state plainly rather than projecting a negative base into a false value. The better tools build from something the company does have: the revenue-build DCF, which constructs cash flow from projected revenue, and the forward estimate model, which prices the year ahead on analyst consensus.
Questions
What growth rate does the Studio use? The stronger of the analyst consensus estimate for the years ahead and the median of four measures of the company's own growth, held between zero and fifteen percent. When neither source exists, the rate falls back to eight percent and the Assumptions card says so.
What discount rate should I use? Nine percent is the Studio's stated default, the long-run return of the stock market itself. The Assumptions card also offers the computed weighted average cost of capital for the company, or any rate you enter. A higher rate lowers the value; a lower rate raises it. The sensitivity table on the DCF card shows the value across both.
Is the calculator free? Yes. Stock Valuation Studio is free in full, with no accounts and no paid tier. The workup runs on the company filings, and every input on the Assumptions card can be changed and re-run.
Free Tool
The Studio projects ten years of free cash flow, adds a terminal value, discounts everything back at the rate on the Assumptions card, and prints the fair value, the margin of safety, the buy price, and the verdict on one workup.
DCF CalculatorOpen in Stock Valuation Studio →Twelve Stocks the DCF Fits Best
Every tile opens Stock Valuation Studio already set on the discounted cash flow model. The link sets the model only; enter the ticker in the Studio to run that company through it.