Reverse DCF · 2 min · Updated 27 Sept 2026
Instead of guessing a value, ask what the current price already needs to be true. Then compare it with what the company has delivered.
Every share price is a forecast in disguise. For whatever a company trades at, some combination of growth, margins and discount rate makes that price fair. A reverse discounted cash flow finds it.
We run the same model as the valuation, with every other assumption fixed, and search for the growth in year one that makes the value equal today’s price. The search runs between -40 % and +80 % a year. If even -40 % leaves the value above the price, the price is assuming the company shrinks; if +80 % is not enough, the price asks for more than any business sustains. The dossier says which of the two it is.
For companies not valued on cash flows, the question moves to their own lever: the revenue multiple the price is paying, the return on equity that would justify a bank’s price-to-book, the EV/EBITDAR of an airline, or the margin a cyclical would need across the cycle.
Next to the implied growth, the dossier shows the growth the company has delivered (the median of its last five years in its filings) and the 25 % cap above which none of our forecasts starts. A price that needs 30 % a year from a company that has grown 5 % is not impossible, but it is a bet on a change, and you should know which change.
When we measured a hundred large and small companies in September 2026, the median price assumed about twice the growth those companies had shown in their filings. That is normal: prices include hope. The question is how much.
The reverse DCF is part of the unlocked dossier, next to the bear, base and bull scenarios.