Reverse DCF Calculator
The growth rate today's price already assumes, solved from the price rather than assumed.
Today’s price only makes sense if free cash flow compounds at 7.7% a year for 10 years. That is now one number to judge against the business, rather than five assumptions to defend. Ask whether this company has grown that fast before, and whether anything makes the next 10 years easier than the last.
Worked example. A $100 stock with 1M shares and $5M of free cash flow, discounted at 10% over ten years with 2.5% terminal growth, needs free cash flow to compound at 7.7% a year to justify the price. Now there is one number to judge instead of five to defend: has this business grown that fast before, and is anything about the next decade easier than the last?
Frequently asked questions
Why reverse a DCF instead of building one?
Because a forward DCF is easy to reverse-engineer. Adjust growth and discount rate a little and you can justify almost any price, which makes the output a reflection of your prior. Inverting it isolates a single testable claim about the business.
What discount rate should I use?
Your required return, or the company's WACC if you are valuing the whole enterprise. Higher discount rates imply higher required growth for the same price, so the two inputs move together and the result is sensitive to both.
Why does it sometimes refuse to answer?
Growth must stay below the discount rate for the terminal value to converge, which puts a ceiling on what any price can imply. Above that ceiling there is no valid growth rate, so none is shown rather than an absurd one.
What does negative implied growth mean?
The market expects the business to shrink. That can be a genuine opportunity if you disagree, or an accurate read of a business in decline. Either way it tells you the debate is about decline rather than growth, which is a useful reframing.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.