How To Use the Calculator
Enter the Current Share Price, Free Cash Flow Per Share (FCF), Expected future growth rate, Total Years to Simulate (n), and discount rate. Click the "Calculate" button. The output will show below.
This includes the Intrinsic Value and the percentage Undervalued/Overvalued. That percentage is based on the difference between the current price and calculated intrinsic value.
Formula Explained
PV = Present Value of Future Cash Flows
FCF = Free Cash Flow Per Share
g = Reasonable Annual Growth Rate of FCF
n = The Number of Years Simulated in the Model
k = Discount Rate (US Treasury Bonds, AAA Corporate Bonds, WACC, S&P 500 Return, etc)
Warning
Make sure to invest with a strong margin of safety. Inputs need to be realistic and may prove to be inaccurate (Garbage In/Garbage Out).
Video Explanation