How to Find Discounted Cash Flow for all Stocks


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When I started looking to manage some of my own stocks, one of the main evaluation points was discounted cash flow (DCF).  DCF is nothing new, and it is also nothing exact, meaning everybody does it differently.  But, I was interested in specifically how Warren Buffett does it, and one of the best resources I found that explained this in terms I could understand and apply, was a website called www.buffettsbooks.com, and specifically this page:

Keep in mind this is different than their Book Value Intrinsic Calculator (which I will also write about and link here).  I would encourage you to watch the video on the DCF page and read thru the post, but in a nutshell what it says is that based on watching videos of Warren, reading interviews with him, reading 50 years of Berkshire stockholder letters, etc, that he goes thru 6 steps when figuring discounted cash flow for a stock:

  1. Estimate the free cash flow
  2. Estimate the short term growth rate
  3. Determine the short term
  4. Determine the discount rate
  5. Determine the growth into perpetuity
  6. Input the number of shares outstanding

They then take those steps, provide a calculator that uses them, and shows you where to find the data to enter into the calculator.  Pick a stock, go to a Yahoo or Morningstar and find 10 years of data, enter it into the calculator, and it kicks out a discounted cash flow value.  Pretty sweet.  My hat is off to the Buffett Books guys for figuring this all out.  Now the rub. 

When the post was first written, you could easily go to Morningstar and copy 10 years of free cash flow into the calculator, and also what you needed to figure the Net Income Growth Rate.  But, Morningstar has since changed their interface, so now you have to dig to find that info, then manually enter it all in the calculator.  It is tedious at best, not to mention possibly inaccurate with all the steps. 

Plus, how do you do that for 5,000 stocks, and what happens next week when the price changes or shares or something else, and you have to do it all over again? 

Nonetheless, I started plugging values into their calculator for various stocks I was interested in and it would give me a discounted cash flow per share.  Say for Apple it kicks out a DCF of $100/share, and Apple is currently trading at $150/share, that tells me it could be overpriced. 

So yeah, the calculator works, but how applicable is it for an average joe looking to manage some of his own portfolio?  Not very, I needed that info for all stocks.

Well, solving that was one of the drivers for creating www.mystockdata.com.  I went out, found all the backend data available thru various services, started loading it up weekly, do the DCF calculations based on Buffett Books, and provide the results.  The Stock Search page includes columns for DCF_IV (10% discount rate) and DCF_IV2 (15% discount rate) for all stocks on the NYSE and NASDAQ. 

NOTE:  there are about 5000 stocks between the NYSE and NASDAQ, but the Stock Search page only includes 3,500.  Why.  First, we only show stocks that report using USD or CAD as that is what we are looking to trade.  Second, DCF is based on 10 years of history, and some stocks don’t have that, so even though they might be included on the Stock Search page, they won’t have a DCF value.  Lastly, some of the 5,000 stocks will stop reporting prices via the apis we use.  That happens when they stop being traded primarily. 

As you go thru the DCF calculator, you will also see there are variables you need to enter.  Here they are and what values we use:

What do you consider short term:  10 years
Discount rate:  they recommend 10% for large cap (DCF_IV), and 15% for small cap (DCF_IV2).   
Perpetuity rate:  3% What does this mean for you?  

YRSYMTXN_DATEYRS_HISTDUP_FLAGAVG_FCFNI_GROWTHSUM_DFCFSUM_DFCF2DPVDPV2TOT_VALTOT_VAL2SHARESDCF_IVDCF_IV2YIELDDPSBVBV_GROWTH10YR_NOTEBV_IVPRICE
2013AAPL 2013-09-28 00:00:0010015902.000.723875588.142684247.3832690854.5911694626.6336566442.7314378874.01259091411.34554.9851.330.414.770.392.35108.3818.92
2014AAPL 2014-09-27 00:00:0010020816.000.461327348.98954143.556744996.802412913.958072345.783367057.5024342331.62138.3230.970.464.580.342.5470.2726.28
2015AAPL 2015-09-26 00:00:0010027566.000.441620037.861167982.307928207.342836188.479548245.214004170.7623014414.89173.9933.140.505.190.322.1473.0828.82
2016AAPL 2016-09-24 00:00:0010032760.000.331078458.32796290.803908714.201398279.544987172.522194570.3421883227.90100.2927.370.565.860.291.8466.5129.41
2017AAPL 2017-09-30 00:00:0010037392.000.291003481.58748158.923217668.781151069.184221150.361899228.0920869202.2791.0122.360.616.420.252.3353.6041.68
2018AAPL 2018-09-29 00:00:0010042964.000.25907493.43684970.172486053.68889345.663393547.101574315.8219822171.2079.4218.640.695.410.172.9126.2353.06
2019AAPL 2019-09-28 00:00:0010047959.000.16665536.11514576.081322966.43473269.931988502.54987846.0118471107.6653.4813.700.764.900.112.1418.2762.26
2020AAPL 2020-09-26 00:00:0010053648.000.09516432.41408764.48731204.80261576.741247637.21670341.221735271.9038.637.610.813.770.030.8912.23115.05
2021AAPL 2021-09-25 00:00:0010059936.000.10585438.38462931.75841294.34300959.501426732.72763891.251670185.4345.747.280.873.78-0.021.4510.73148.64
2022AAPL 2022-09-24 00:00:0010066935.000.12726901.61570786.611159442.21414771.781886343.82985558.3816216116.3360.788.650.923.12-0.051.959.89149.45

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