Estimate a company's intrinsic value with a two-stage discounted cash flow (DCF) model. Project free cash flow, discount it at your required return (WACC), add a terminal value, and get an intrinsic value per share plus a margin of safety against today's price.
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A DCF estimates what a business is worth today by projecting its future free cash flows and discounting them back to the present using a required rate of return. The sum is the enterprise value; subtract net debt and divide by shares for intrinsic value per share.
The discount rate reflects the return investors require. Many analysts use the weighted average cost of capital (WACC), often in the 7–12% range for large, stable companies and higher for riskier ones. The rate must exceed your terminal growth rate for the model to be valid.
Margin of safety is the discount between your estimated intrinsic value and the current price. Buying well below intrinsic value cushions you against errors in your assumptions. The calculator shows it as a percentage when you enter the current price.