What is a reverse DCF?

A reverse DCF flips a normal discounted-cash-flow model around. Instead of guessing a growth rate to produce a value, it takes the market price as given and solves for the growth rate that price implies. It tells you what the market is already expecting.

Why is that more useful than a forward DCF?

It sidesteps the biggest weakness of a forward DCF — your growth guess. Rather than arguing about the 'right' growth rate, you ask a sharper question: is the growth the market is pricing in realistic for this company? If the implied rate looks impossible, the stock is expensive; if it looks easy to beat, it may be cheap.

What counts as a high implied growth rate?

Context matters, but as a rough guide: an implied rate under ~8%/yr is a low bar most durable businesses can clear; 10–18% is demanding; above ~20% a year for a decade is aggressive and few companies sustain it. Compare the implied rate to the company's actual recent growth.

Like any DCF it depends on the discount and terminal rates, and it needs positive free cash flow. It's a reasoning tool, not a verdict — use it to sanity-check what you'd have to believe to pay today's price.

Market expectations

Reverse DCF Calculator

The growth rate the market is already pricing in — is it realistic?

Solve for g where DCF(FCF, g, r) = today's price

Free cash flow / share

Trailing-twelve-month FCF ÷ shares.

Current price

Discount rateoptional

Your required return (default 10%).

Terminal growthoptional

Long-run growth after year 10.

Enter free cash flow per share and the current price.

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How it works

A normal DCF asks “what's this worth if it grows at X%?” — and the answer is only as good as your guess for X. A reverse DCF asks the better question: given what the stock costs today, what growth is the market already pricing in?

This tool holds the price fixed and solves for the free-cash-flow growth rate that a ten-year DCF would need to justify it. Then you make one judgment: is that rate realistic for this company? When the market is implying 30% a year for a decade, you know the bar is high. When it's implying 4%, expectations are low and the surprises may be to the upside. It's the single most clarifying number you can put on a richly-valued stock — and it makes for a very shareable chart.

Frequently asked

What is a reverse DCF?: A reverse DCF flips a normal discounted-cash-flow model around. Instead of guessing a growth rate to produce a value, it takes the market price as given and solves for the growth rate that price implies. It tells you what the market is already expecting.
Why is that more useful than a forward DCF?: It sidesteps the biggest weakness of a forward DCF — your growth guess. Rather than arguing about the 'right' growth rate, you ask a sharper question: is the growth the market is pricing in realistic for this company? If the implied rate looks impossible, the stock is expensive; if it looks easy to beat, it may be cheap.
What counts as a high implied growth rate?: Context matters, but as a rough guide: an implied rate under ~8%/yr is a low bar most durable businesses can clear; 10–18% is demanding; above ~20% a year for a decade is aggressive and few companies sustain it. Compare the implied rate to the company's actual recent growth.
What are its limits?: Like any DCF it depends on the discount and terminal rates, and it needs positive free cash flow. It's a reasoning tool, not a verdict — use it to sanity-check what you'd have to believe to pay today's price.

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DCF Intrinsic Value CalculatorWarren Buffett's discounted cash flow — a stock's intrinsic value from the cash it throws off.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.

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.