WACC
PREDICTABILITY
GROWTH WINDOWS
FCF PROJECTION
SENSITIVITY
PER-YEAR CASH FLOWS
| Year | CF | Discount factor | PV | Cumulative PV |
|---|---|---|---|---|
| 1 | 1.85 | 0.9228 | 1.71 | 1.71 |
| 2 | 1.99 | 0.8516 | 1.69 | 3.40 |
| 3 | 2.14 | 0.7858 | 1.68 | 5.08 |
| 4 | 2.30 | 0.7252 | 1.67 | 6.75 |
| 5 | 2.48 | 0.6692 | 1.66 | 8.41 |
| 6 | 2.66 | 0.6175 | 1.65 | 10.05 |
| 7 | 2.87 | 0.5699 | 1.63 | 11.68 |
| 8 | 3.08 | 0.5259 | 1.62 | 13.31 |
| 9 | 3.32 | 0.4853 | 1.61 | 14.92 |
| 10 | 3.57 | 0.4478 | 1.60 | 16.51 |
| 11 | 3.66 | 0.4133 | 1.51 | 18.03 |
| 12 | 3.75 | 0.3814 | 1.43 | 19.46 |
| 13 | 3.84 | 0.3519 | 1.35 | 20.81 |
| 14 | 3.94 | 0.3247 | 1.28 | 22.09 |
| 15 | 4.04 | 0.2997 | 1.21 | 23.30 |
| 16 | 4.14 | 0.2765 | 1.14 | 24.44 |
| 17 | 4.24 | 0.2552 | 1.08 | 25.52 |
| 18 | 4.35 | 0.2355 | 1.02 | 26.55 |
| 19 | 4.46 | 0.2173 | 0.97 | 27.52 |
| 20 | 4.57 | 0.2005 | 0.92 | 28.43 |
REVERSE DCF
At $118.88, the market implies a stage-1 growth rate of 28.4%.
MARKET IMPLIES
28.4%
YOUR ASSUMPTION
7.6%
DELTA
+20.8pp
If $118.88 is correct and your other inputs (WACC 8.4%, 10+10y, terminal 2.5%) hold, the market needs WMT to grow cash flow at 28.4% annually for the next 10 years.