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Growth Priced Into a Stock

How do you guys calculate growth priced into a stock?

Do you just model out EPS (say 5-years), apply a terminal multiple, discount the terminal price back using the cost of capital, then find the growth rate that makes the model price equal the current stock price?

I work in PWM so I don’t do much of this on a daily basis; just wanna know how the pros do it… ;)

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Discounted cash flow 

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RIP

Thanks for the link. I googled reverse DCF and other models use free cash flow instead of EPS…is that more common? Also neither account for share buybacks; is that something you just adjust subjectively?

americanbankster wrote:

Thanks for the link. I googled reverse DCF and other models use free cash flow instead of EPS…is that more common? Also neither account for share buybacks; is that something you just adjust subjectively?

Share buybacks reduce the share count in your per share price

http://aswathdamodaran.blogspot.com/2018/10/high-and-higher-money-in-mar...

What about reversing the FCFE model from level 2 to calculate the implied growth rate?

That makes theoretical sense but I don’t see any examples online that do it that way…