Fundamental valuation workspace
Stock Valuation & Fair Value Lab
Translate operating assumptions into enterprise value, equity value, and a per-share fair-value range using a transparent five-year discounted cash-flow model.
Base-case forecast
Revenue and free cash flow
RevenueFree cash flow
Assumption sensitivity
Fair value per share matrix
Rows vary WACC; columns vary terminal growth.
How this valuation works
The model forecasts unlevered free cash flow for five years, discounts each year at the selected weighted average cost of capital, estimates a perpetual terminal value, then adds cash, subtracts debt, and divides by diluted shares. Small changes in long-term assumptions can materially change fair value; use the scenario range and matrix instead of treating one output as precise.
Decision guide
Use valuation as an assumption audit, not a precise price target
The decision it supports
Test what revenue growth, margins, reinvestment, discount rate, and terminal growth would need to be true for a range of equity values. The bear, base, and bull cases make disagreement visible instead of hiding it in one output.
Worked example
Load a company, verify every baseline against its filings, and run the base case. Then raise the discount rate by one percentage point and reduce year-five margin by two points. If value changes sharply, the thesis is highly sensitive and needs a wider margin of safety.
Method
The model projects five years of operating results, estimates after-tax operating profit and reinvestment, discounts free cash flow to present value, and adds a discounted terminal value. Cash is added, debt is subtracted, and equity value is divided by diluted shares.
Assumptions and limitations
- Loaded figures may be delayed, normalized differently, or incomplete. Verify them against current company filings.
- Terminal value can dominate the result and is especially sensitive when terminal growth approaches the discount rate.
- The model does not fully represent dilution, leases, pensions, cyclicality, currency, regulation, or unusual capital structures.
- Fair value is a conditional range, not a promise that the market will trade there.
Common mistakes to avoid
- Using management targets as facts without testing a weaker case.
- Combining nominal cash flows with a real discount rate, or mixing currencies and units.
- Ignoring share-based compensation, net debt, and future dilution.
- Changing several assumptions to force the output near the current market price.
Continue learning: Evidence-led research · Valuation terms
Verify the baseline: Find the company filings in SEC EDGAR. Match the reporting period, currency, diluted share count and cash flow definitions before entering figures. A filing supplies evidence, not a fair value guarantee.
Print a free planning worksheet to keep the assumptions, outputs and review questions together. No account or payment is required; worksheet entries are not sent to Market Master.