Reverse-DCF as a Lie Detector
We don't use a DCF to produce a target price. We run it backwards, to extract the growth rate the market is already assuming — and then ask whether a real business can deliver it.
A discounted cash flow model has enough free parameters that it will produce whatever answer you want. Change terminal growth by fifty basis points and the "intrinsic value" moves twenty percent.
Anyone presenting a DCF-derived target price to two decimal places is telling you about their spreadsheet, not the business.
So we run it backwards. Take the current market price as the output, hold the discount rate fixed at a defensible value, and solve for the growth rate that makes the equation balance.
Now you have a single falsifiable number: the growth the market requires.
The rest of this note is for members
Full thesis, the numbers behind it, the risks we underwrite and the price we paid — published in full to subscribers. No summaries, no redactions.
Already a member? Member sign-in is coming with the paid launch.
This note is research, not advice. It does not account for your financial situation or objectives. Positions described may be held by Altius Compounding or its principals.
