^GSPC$7,423.20+0.56%^IXIC$25,009.60+1.04%^DJI$42,502.91-0.16%^VIX$27.32+2.05%^STOXX50E$67.27+0.73%BTC-USD$79,600.39-1.10%ETH-USD$2,257.18-0.75%SOL-USD$90.98-3.49%AAPL$298.95+1.41%MSFT$405.09-0.66%NVDA$225.86+2.30%TSLA$445.21+2.71%META$616.61+2.26%GOOGL$402.64+3.95%AMZN$270.15+1.63%AMD$445.40-0.64%EURUSD$1.1709-0.27%GC$4,686.94-0.60%CL$101.27-1.72%^GSPC$7,423.20+0.56%^IXIC$25,009.60+1.04%^DJI$42,502.91-0.16%^VIX$27.32+2.05%^STOXX50E$67.27+0.73%BTC-USD$79,600.39-1.10%ETH-USD$2,257.18-0.75%SOL-USD$90.98-3.49%AAPL$298.95+1.41%MSFT$405.09-0.66%NVDA$225.86+2.30%TSLA$445.21+2.71%META$616.61+2.26%GOOGL$402.64+3.95%AMZN$270.15+1.63%AMD$445.40-0.64%EURUSD$1.1709-0.27%GC$4,686.94-0.60%CL$101.27-1.72%
RockstarMarkets
All glossary
Accounting

DCF

Discounted Cash Flow - valuation by discounting projected cash flows to present.

What it means

DCF projects a company's free cash flows into the future, then discounts them back to today using WACC. The result is a theoretical 'intrinsic value.' Includes a terminal value capturing cash flows beyond the explicit forecast period.

Why it matters

DCF is the conceptually correct way to value a business. The execution challenges - projecting cash flows accurately and choosing the right discount rate - are why so many DCFs are exercises in confirmation bias.

How to use it

Treat DCFs as scenario analysis (bull, base, bear cases) rather than point estimates. Sensitize against WACC and terminal growth. Compare your DCF range to current market price - large gaps deserve scrutiny in either direction.

Take it further

Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.

Ask Rocky