Reverse DCF Tool on SecDiver

SecDiver
4 min readJan 19, 2024

Do you know that secdiver.com is the only website which showcases Reverse DCF for all the stocks and that too for FREE. We source all this information from SecEdgar website. (Pardon for the Ads, we use that to fund our website and working on a paid plan).

Do let us know if you are interested/want to share feedback by reaching us out hello@secdiver.com

“I make no attempt to forecast the market — my efforts are devoted to finding undervalued securities.” — Warren Buffett

Disclaimer:

The information on secdiver.com site, and its related publications, is not intended to be, nor does it constitute, investment advice or recommendations. In no event shall SecDiver.com be liable to any member, guest, or third party for any damages of any kind arising out of the use of any content or other material published or available on SecDiver.com, or relating to the use of, or inability to use, SecDiver.com or any content. The information on this site is not guaranteed for completeness, accuracy, or in any other way.

Data is provided as is, please do your due diligence before making any investments, Markets can be very volatile!

What is Reverse DCF and Why we should use it?

Reverse DCF is a method to determine implied growth rate or future cash flows from a company’s stock price. It involves working backwards from the market price to estimate the assumptions behind it. By applying this analysis, investors can assess if the stock is overvalued or undervalued based on their own analysis. More info here: Investopedia

You will need two key inputs for getting the growth rates market is expecting from your favorite company.

  • marketcap or stock price of the stock: e.g for AAPL 177 is stock Price as 11 Aug, 2023
  • sustained cash flow or free cash flow of the stock OR per share fcf/eps for the stock, e.g: EPS of AAPL is 6.11 in FY 2022

Note:

  1. We are taking operating cashflows as input here, assuming in the long term we will get 100% of these to shareholders
  2. Ideally the value should be: operating cashflows — maintenance capex + capitalized r&d — (dilution due to share issuance’s/stock compensation)

Go ahead and check out Reverse DCF Tool on SecDiver.com for any stock ticker

How to find Reverse DCF Tool on SecDiver.com

Reverse DCF Tool can be accessed : [under Financials and KPIs : lower sub menu] on any Ticker page found through Search Page.

secdiver.com/reverse_dcf/<Ticker> [short cut to any ticker], e.g for Apple — AAPL: https://secdiver.com/reverse_dcf/AAPL

Examples of Business Segment (AMZN Stock)

The tool essentially showcases a table which 10 year ending PE and how much market is pricing in the growth.

For AMZN for 20 PE [4th row] in 2032, Market is expecting 15.34% growth for next 10 years. Is this expected, can Amazon continue to grow at this rate is the questions we need to get answers to, If yes: than current market price may seem reasonable otherwise it may not be.

Personally for me <10% growth for long term is itself hard as GDP growth is <4% and once a company becomes GDP size it cannot grow more than the GDP. We just need to be mindful. As with regards to Amazon, its can be the case — historically they have grown 10%+ rates. We will know more in the future…

More details:

In this report, we are doing Reverse DCF assuming for today’s current price: 89.03 to meet market expectations, what growth rate company should grow for next 10 years?
Each row can be thought as
1. After 10 years from today — if PE of the stock is X, what should be the growth rate from today to meet that PE in future
2. lower PE in future is a reasonable justification, higher PE in future is risky
3. Assumptions: We are using discount rate as 10%, Period as 10 years and Reinvestment Rate of 100% in the default report, overriding will change this values
4. You can override values by passing the input data as a query param to the URL
5. direct link: reverse dcf for LYV
6. override link: reverse dcf with override in URL for LYV
7. inf values means, cashflow::operating is negative or we do not have data for the stock/ticker

Happy Investing,

SEC Diver team

PS: Thanks for your generous donations to help run secdiver.com, if you are interested in helping feel free to Buy us Coffee

Have a wonderful day.

Stay Blessed, Healthy, and always Happy!

Disclaimer:

The information on secdiver.com site, and its related publications, is not intended to be, nor does it constitute, investment advice or recommendations. In no event shall SecDiver.com be liable to any member, guest, or third party for any damages of any kind arising out of the use of any content or other material published or available on SecDiver.com, or relating to the use of, or inability to use, SecDiver.com or any content. The information on this site is not guaranteed for completeness, accuracy, or in any other way.

Data is provided as is, please do your due diligence before making any investments, Markets can be very volatile!

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