What is a DCF (discounted cash flow)?

A DCF estimates what a business is worth today by projecting the cash it will generate and discounting those future cash flows back to the present. It's the method behind Warren Buffett's definition of intrinsic value: the discounted value of the cash that can be taken out of a business over its life.

What growth and discount rate should I use?

Be conservative. Many value investors use a discount rate of 9–11% (your required return) and a terminal growth rate near long-run GDP, around 2–3%. For growth, lean on a rate the company can defend — overestimating growth is the most common way a DCF produces a misleadingly high value.

Why does the discount rate have to be higher than terminal growth?

The terminal value assumes cash flows grow forever at the terminal rate. If that rate equalled or exceeded the discount rate, the math would imply an infinite value, so the tool requires discount rate > terminal growth.

Is DCF the only way to value a stock?

No — it's one lens, and it's sensitive to your assumptions. Cross-check it against the Graham Number, Lynch's PEGY and a Rule #1 sticker price. Valuo runs all four automatically on any ticker.

Warren Buffett

DCF Intrinsic Value Calculator

Warren Buffett's discounted cash flow — a stock's intrinsic value from the cash it throws off.

Intrinsic value = Σ FCFₙ ÷ (1 + r)ⁿ + terminal value, discounted

Free cash flow / share

Trailing-twelve-month FCF ÷ shares outstanding.

FCF growth (next 10 yrs)

Be conservative — Buffett would.

Terminal growth

Long-run growth after year 10 (≈ GDP).

Discount rate

Your required return. Higher = more cautious.

Current priceoptional

Add it to see the margin of safety.

Enter free cash flow per share, growth, terminal growth and a discount rate.

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How it works

A discounted cash flow values a business by the cash it will hand its owners. This calculator runs a two-stage model: it grows free cash flow at your rate for ten years, adds a terminal value for everything after that, and discounts the whole stream back to today at your required return.

The output is an intrinsic value per share. Compare it to the market price: a price well below intrinsic value is your margin of safety. The model is only as good as its inputs — small changes in growth or discount rate move the answer a lot, which is exactly why Buffett favours businesses whose cash flows are predictable enough to forecast.

Frequently asked

What is a DCF (discounted cash flow)?: A DCF estimates what a business is worth today by projecting the cash it will generate and discounting those future cash flows back to the present. It's the method behind Warren Buffett's definition of intrinsic value: the discounted value of the cash that can be taken out of a business over its life.
What growth and discount rate should I use?: Be conservative. Many value investors use a discount rate of 9–11% (your required return) and a terminal growth rate near long-run GDP, around 2–3%. For growth, lean on a rate the company can defend — overestimating growth is the most common way a DCF produces a misleadingly high value.
Why does the discount rate have to be higher than terminal growth?: The terminal value assumes cash flows grow forever at the terminal rate. If that rate equalled or exceeded the discount rate, the math would imply an infinite value, so the tool requires discount rate > terminal growth.
Is DCF the only way to value a stock?: No — it's one lens, and it's sensitive to your assumptions. Cross-check it against the Graham Number, Lynch's PEGY and a Rule #1 sticker price. Valuo runs all four automatically on any ticker.

Skip the inputs

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More free valuation tools

Graham Number CalculatorBenjamin Graham's fair-value ceiling from earnings and book value.PEG & PEGY Ratio CalculatorPeter Lynch's growth-adjusted value — is the price fair for the growth you're buying?Rule #1 Sticker Price CalculatorPhil Town's sticker price and margin-of-safety buy price from future earnings.Margin of Safety CalculatorThe gap between price and value — and the price to wait for.Reverse DCF CalculatorThe growth rate the market is already pricing in — is it realistic?

Educational Use Only · Not Financial Advice

Analysis, scores, valuations, and buy zones are derived from publicly documented investor frameworks (Buffett, Lynch, Benjamin Graham, Phil Town) for learning purposes only. They are not recommendations from licensed financial advisors. Past performance does not guarantee future results. Prices may be delayed up to 15 minutes. Always conduct your own research before making any investment decisions.