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FMP Institutional DCF

In short

DCF valuation calculated by Financial Modeling Prep's institutional model

An independent DCF calculation from an external financial data provider, built with its own growth and discount-rate assumptions. Comparing it to the platform's own DCF is a quick cross-check: rough agreement is a mild reassuring signal, and a wide gap is worth investigating rather than assuming either figure is right.

Two independent DCF estimates for the same company rarely match exactly, because a DCF's output is only as good as its inputs: the projected growth rate and margins for each forecast year, the discount rate used, the terminal growth assumption or exit multiple, and how recent the underlying data is. The platform's own DCF and this externally supplied figure are built on separate assumptions and, often, a different data vintage, so a gap between the two is expected rather than a sign either one is wrong. Practitioners generally treat close agreement between independently built DCFs as a mild corroborating signal, and a wide divergence as a prompt to check which input — growth, discount rate, or terminal value — is driving the difference, rather than assuming either figure is more accurate.

Formula

Proprietary FMP methodology

Related concepts

  • DCF ModelImagine a friend promises to pay you $100/year for 10 years. Would you pay $1,000 today? Not quite — money tomorrow is worth less than money today. DCF calculates what future cash flows are worth right now.
  • Intrinsic ValueThe market price is what people are willing to pay right now. Intrinsic value is an estimate of what the stock is actually worth based on the company's cash flows and assets. If a $40 stock has an estimated intrinsic value of $55, the gap ($15) is what practitioners call the margin of safety.
  • Comparable AnalysisIf similar houses in your neighbourhood sell for $300/sqft and your house is 2,000 sqft, it's worth roughly $600K. Same logic applies to stocks — take the average P/E or EV/EBITDA of similar companies and apply it to the target's own earnings or EBITDA.