Reverse DCF

A reverse discounted cash flow inverts the standard DCF: instead of assuming a growth rate and solving for fair value, we assume fair value equals the current market price and solve for the growth rate that makes the math work. The output is the implied growth rate already embedded in the stock — what the market is paying for, in plain English. Reverse DCF is our favorite tool for cutting through narrative debates. If a company is widely described as a 'growth stock' but its current price already implies 25% revenue growth for ten years, the burden of proof shifts to whether 25% for ten years is achievable, not whether growth is good. Conversely, if a beaten-down 'value stock' is implying negative growth for the next decade, the contrarian case can be quantified rather than asserted. We build reverse DCFs at the company's strict and moderate cost-of-equity assumptions and test whether the implied growth rate sits inside, above, or below the analyst consensus and the company's own guidance. When the gap is large, we annotate it as a consensus divergence and document our reasoning rather than auto-revising toward consensus.