Key insights
- The post discusses using a reverse DCF calculator to assess market-implied growth rates for companies like ASML. It suggests that some companies require aggressive growth to justify their current prices, while others are priced for decline. This approach helps investors evaluate whether market expectations are realistic, potentially identifying overvalued or undervalued opportunities in the US equity market.
The annoying part of reverse DCFs is always pulling shares outstanding, FCF, and net debt manually. Found one that just lets you search a ticker and prefills everything, you only adjust WACC and terminal growth.
Reverse DCF is more useful than a normal DCF because you stop pretending you know the future. It tells you what FCF growth rate the market is already pricing in, then you only have to ask if that's achievable.
Ran it on a few names:
- ASML needs aggressive growth to justify current price * Some deep value names show negative implied growth, market literally pricing in decline
Anyone got a workflow they like better than this?