Fair Value Price Calculator | DCF Stock Valuation
Calculate the intrinsic fair value of any stock using our free DCF (Discounted Cash Flow) calculator. Make smarter investment decisions with accurate stock valuation based on fundamentals.
Overview
Calculate Fair Value Price with Confidence
Discover the true intrinsic value of any stock using the proven Discounted Cash Flow (DCF) method. Make smarter investment decisions based on solid fundamentals, not market hype.
Our free DCF calculator helps investors determine what a stock is really worth. By analyzing a company's free cash flow, growth projections, and risk factors, you can calculate the fair value per share and identify undervalued investment opportunities.
Whether you're a value investor following Warren Buffett's philosophy, a financial analyst preparing research reports, or a DIY investor managing your own portfolio, understanding fair value price is essential for long-term investment success.
Key Features
Input Parameters: Current FCF, Growth Rate, Terminal Growth Rate, Discount Rate/WACC, Projection Period, Shares Outstanding
Calculate intrinsic fair value based on DCF method
Interactive results display
Educational content about fair value pricing
Comprehensive FAQ section
Pros
Cons
Who Should Use This Tool?
Value Investors
Long-term investors following Warren Buffett's philosophy who want to identify undervalued stocks and avoid overpaying for quality companies.
Financial Analysts
Professionals who need quick DCF calculations for stock research reports, investment recommendations, and valuation analysis.
Finance Students
Students learning about valuation methodologies who want to practice with real companies and understand how DCF models work in practice.
DIY Investors
Self-directed investors who prefer fundamental analysis over market timing and want to make data-driven investment decisions.
What is Fair Value Price?
Fair value price, also known as intrinsic value, is the true worth of a stock based on its fundamental financial performance—not what the market is currently willing to pay for it. Think of it like this: just because someone's willing to pay $100 for a $20 bill doesn't make it worth $100. The same principle applies to stocks.
When you calculate fair value, you're essentially asking: "Based on this company's actual cash-generating ability, what should this stock really be worth?" This helps you identify whether a stock is overvalued (trading above fair value) or undervalued (trading below fair value)—which is where the real opportunities lie.
The market price fluctuates based on emotions, news, trends, and speculation. Fair value, on the other hand, is grounded in cold, hard numbers: cash flows, growth rates, and risk. It's the difference between gambling and investing.
Why Should You Calculate Fair Value?
Avoid Overpaying
Know when a stock is overpriced and avoid buying at inflated valuations. Even great companies can be bad investments if you pay too much.
Find Hidden Gems
Identify undervalued stocks that the market has overlooked. These are the opportunities that can generate significant returns over time.
Make Rational Decisions
Remove emotion from investing. When you have a calculated fair value, you can make decisions based on data, not fear or greed.
Long-Term Success
Value investing based on fair value has been proven by legends like Warren Buffett and Benjamin Graham to generate superior long-term returns.
How to Use Our DCF Calculator
Our free DCF calculator makes stock valuation simple. Follow these steps to calculate the fair value of any stock:
- Find Free Cash Flow (FCF): Check the company's latest financial statements (10-K) or use financial websites like Yahoo Finance. Look for "Free Cash Flow" in the cash flow statement.
- Estimate Growth Rate: Consider historical growth, industry trends, and analyst projections. Be conservative—5-15% is typical for mature companies.
- Set Terminal Growth Rate: This is the long-term sustainable growth rate (usually 2-3%, matching GDP growth).
- Determine Discount Rate (WACC): Use 10% for average companies, 8-9% for stable firms, or 12-15% for riskier businesses.
- Enter Shares Outstanding: Found in the income statement or key statistics section.
- Calculate Fair Value: Click calculate and get instant results showing the intrinsic value per share!
Why Should You Calculate Fair Value?
Avoid Overpaying
Know when a stock is overpriced and avoid buying at inflated valuations. Even great companies can be bad investments if you pay too much.
Find Hidden Gems
Identify undervalued stocks that the market has overlooked. These are the opportunities that can generate significant returns over time.
Make Rational Decisions
Remove emotion from investing. When you have a calculated fair value, you can make decisions based on data, not fear or greed.
Long-Term Success
Value investing based on fair value has been proven by legends like Warren Buffett and Benjamin Graham to generate superior long-term returns.
How the DCF Method Works
The Discounted Cash Flow (DCF) method is the gold standard for stock valuation. It's based on a simple but powerful idea: a company is worth the sum of all the cash it will generate in the future, adjusted for the time value of money.
The DCF Formula Explained
Step 1: Project Future Free Cash Flows
Estimate how much cash the company will generate each year for the next 5-10 years. This is based on the current free cash flow and expected growth rate.
Step 2: Calculate Terminal Value
After your projection period, the company will continue generating cash. We calculate this "terminal value" assuming a steady, sustainable growth rate (usually 2-3%, matching GDP growth).
Step 3: Discount to Present Value
Use the discount rate (WACC - Weighted Average Cost of Capital) to convert all future cash flows to today's dollars. This accounts for risk and the time value of money.
Step 4: Calculate Per-Share Value
Add up all the discounted cash flows to get the enterprise value, then divide by the number of shares outstanding. That's your fair value per share!
Pricing
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How We Rated It
Accuracy
Industry-standard DCF methodology used by professional analysts
Ease of Use
Intuitive interface with clear guidance and explanations
Educational Value
Comprehensive learning resources for valuation concepts
Features
Core DCF features well-implemented, room for advanced tools
Value for Money
Completely free with no limitations or hidden costs
What Makes It Unique
100% Free with No Premium Upsells
Unlike competitors, all features are completely free with no tiered pricing or premium gates
Educational First Approach
Built to teach valuation methodology, not just calculate numbers. Comprehensive guides explain the 'why' behind DCF
Instant Results
Get fair value estimates in seconds with streamlined interface. No complex setup or learning curve
No Account Required
Use immediately without registration, email capture, or any barriers to entry
Industry-Standard Methodology
Uses the same DCF approach trusted by Warren Buffett and professional analysts worldwide
Our Rating Methodology
We evaluate tools across multiple dimensions to provide a comprehensive assessment:
- Accuracy: How reliable and precise is the tool in delivering results?
- Ease of Use: How intuitive is the interface and user experience?
- Educational Value: Does it help users understand the underlying concepts?
- Features: How comprehensive and well-implemented are the features?
- Value for Money: Is the pricing justified by the value provided?
Screenshots
Main calculator screen with input parameters for free cash flow, growth rates, and discount rate
Interactive results showing fair value per share with detailed breakdown of valuation components
Comprehensive guides explaining DCF methodology, step-by-step instructions, and practical examples
Frequently Asked Questions About DCF Valuation
What is DCF valuation and why is it important?
Discounted Cash Flow (DCF) valuation is a method used to estimate the value of an investment based on its expected future cash flows. It's important because it helps investors determine the intrinsic value of a stock, separate from market emotions and short-term fluctuations.
How accurate is the DCF method?
DCF is only as accurate as your inputs. It's not a crystal ball—it's a framework for thinking about value. The key is to be conservative with your assumptions and use sensitivity analysis to test different scenarios.
Where do I find free cash flow data?
Check the company's cash flow statement in their annual report (10-K) or on financial websites like Yahoo Finance, Google Finance, or Seeking Alpha. Free Cash Flow = Operating Cash Flow - Capital Expenditures.
What's a good discount rate to use?
A common rule of thumb is 10% for average companies. Use 8-9% for very stable, low-risk companies (like utilities), and 12-15% for riskier businesses or growth stocks.
Should I buy a stock immediately if it's undervalued?
Not necessarily. First, double-check your assumptions. Second, understand WHY it's undervalued. Third, consider your margin of safety—wait for an even better price if possible. Patience is key in value investing.
What is terminal growth rate in DCF?
Terminal growth rate is the growth rate you assume a company will grow at forever after your projection period. It's typically set to 2-3%, roughly matching long-term GDP growth and inflation, as companies can't outgrow the economy indefinitely.
How does Warren Buffett use DCF?
Warren Buffett uses DCF as part of his value investing approach. He focuses on companies with predictable cash flows, uses conservative growth assumptions, and insists on a margin of safety—buying only when price is significantly below fair value.
Why Choose Our Free DCF Calculator?
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Instant Results
Calculate fair value in seconds with our streamlined, user-friendly interface.
Educational Focus
Learn the methodology behind the numbers with comprehensive guides and explanations.
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