Free tool
Reverse DCF calculator: what growth is priced in?
A DCF asks what a stock is worth for a given growth rate. A reverse DCF asks the opposite question: at today’s share price, how fast must free cash flow grow over the next ten years? Load one of 58 large US stocks or enter your own figures.
Implied free cash flow growth, per year for 10 years
7.8%
How the reverse DCF works
The calculator uses the same discounted cash flow model as a regular DCF — ten years of growth, then a terminal value — but treats the share price as the answer and the growth rate as the unknown. It searches for the single annual growth rate that makes the intrinsic value equal to the price, testing rates between −50% and +100% a year.
How to read the implied growth rate
Compare it with what the company has actually delivered. If the price implies free cash flow growth far above the company’s past revenue and cash flow growth, the market is betting on an acceleration, and the share has little room for disappointment. If it implies growth below the company’s track record, expectations are modest.
Worked example
A share priced at $117.58 with free cash flow of $5 per share, a 9% discount rate and 2.5% terminal growth implies free cash flow growth of 7.8% a year for the next ten years.
Frequently asked questions
What is a reverse DCF?
A reverse discounted cash flow starts from the share price and works backwards to the growth rate the market is assuming, instead of estimating a value from your own growth forecast.
Why can’t the calculator find a growth rate?
Either free cash flow is zero or negative, which a DCF cannot value, or the price would require growth outside −50% to +100% a year, or the discount rate is not above the terminal growth rate.
Is a high implied growth rate a sell signal?
No. It measures how much optimism the price contains, not what will happen. Some companies do deliver very high growth. This is not investment advice.
More free tools
Educational tool. Results depend entirely on your inputs and are not investment advice.