Methodology

Version 2.0 · Sep 25, 2026 · The same fixed method is applied to every company; nothing is adjusted by hand for individual stocks.

Principles

• Start with what the price implies. The headline number on every page is the revenue growth (and alternatively the operating margin) that today's price implies. That is more robust than any single point estimate.
• Explainable: every number is a reported fact (with XBRL concept and filing), market data (with date and source), a stated assumption, or a model output with its formula.
• Public data only: SEC filings, U.S. Treasury yields, IEX historical trade data and Aswath Damodaran's published market and industry parameters.
• Model value, not a price target: a base case with a bear–bull range, not a forecast of the share price and not a recommendation.

Coverage and update cycle

53 of the largest US-listed non-financial companies that report US-GAAP financial statements in XBRL. Banks and insurers are excluded because a free-cash-flow-to-the-firm model does not fit them. Every morning (UTC) the pipeline fetches the latest SEC data (including the XBRL instance of the newest 10-Q/10-K), Treasury yields, Damodaran's current parameters and the previous trading day's IEX trades, recomputes every valuation and republishes the pages.

1 · Historical base

• Fiscal years from 10-K filings (latest restated figure wins); trailing twelve months = last fiscal year + current year-to-date − prior-year year-to-date.
• EBITA = reported operating income + amortisation of acquired intangibles + acquired R&D expensed at purchase. Both are consequences of past acquisitions; the model does not extrapolate acquisitions, so they are not treated as recurring operating costs. Stock-based compensation stays an expense.
• Operating invested capital = equity + financial debt incl. lease liabilities − cash and marketable securities − goodwill − acquired intangibles − equity-method stakes: the capital organic growth ties up (as in Koller, Goedhart & Wessels, Valuation). Spectrum licences and other indefinite-lived operating intangibles stay in.

2 · Cost of equity (CAPM)

• ERP: Damodaran's implied equity risk premium for the S&P 500 (monthly), backed out of index prices and expected cash flows.
• r_f: the 10-year Treasury yield on the date of the ERP estimate. An implied premium is measured against the yield of that day; pairing it with a different day's yield would mix two estimates. Today's yield is shown for reference.
• β (bottom-up): the cash-corrected unlevered beta of the company's industry (Damodaran, "Betas by Sector (US)"), relevered with the company's debt incl. leases: β = β_U × (1 + (1 − t) × D/E). Industry betas average over many firms and are statistically more reliable than a single-stock regression. Mapping notes: Visa and Mastercard → Information Services; Alphabet and Meta → Advertising (their main revenue source; Damodaran's Internet-software aggregate is dominated by loss-making small caps).

3 · Cost of debt

Interest coverage (EBIT ÷ interest expense, TTM) → synthetic rating and default spread (Damodaran's table for large non-financial firms). Pre-tax cost of debt = r_f + spread; after tax × (1 − 25%), the US marginal rate.

4 · WACC and its path

E = market value (reference price × diluted shares), D = financial debt incl. lease liabilities (book value). This WACC applies to years 1–5; in years 6–10 it moves linearly to the cost of capital of an average mature company, r_f + ERP, which is also the rate at which Damodaran's implied premium discounts the market's cash flows beyond year five.

5 · Forecast (years 1–10)

• Revenue growth starts at the recent trend – the average of the three-year CAGR and trailing-twelve-month growth, bounded to 0–25% – and fades linearly to the terminal rate by year 10.
• Operating margin (EBITA plus the interest component of operating leases) moves from its current level to a target reached in year 5: the company's recent level (average of the last three fiscal years and TTM); if that is below the industry margin (Damodaran), halfway between the two.
• Taxes on operating income: effective rate of the last three years in years 1–5, moving to the 25% marginal rate by year 10.
• Reinvestment = revenue increase ÷ sales-to-capital. The ratio is the company's three-year average (revenue ÷ operating invested capital), bounded to 0.5–2× the industry value; with no positive operating capital, 2× the industry value. This stops fast growers from being penalised for today's investment peaks, and ties every dollar of growth to the capital it needs.
• FCFF = NOPAT − reinvestment, discounted with the cumulative cost of capital of each year (end-of-year convention).

6 · Terminal value

• g = the risk-free rate (Damodaran's default: no company can outgrow the economy forever, and his implied premium assumes the same).
• ROIC in perpetuity = the lower of the company's current return on operating capital and its industry's average return on capital (Damodaran), but at least the cost of capital. The reinvestment rate g/ROIC keeps growth and investment consistent.

7 · From enterprise value to value per share

Per-share value = equity ÷ diluted weighted-average shares of the latest quarter (cover-page count if the diluted figure is missing or implausible). Where a company only reports shares per class, all classes are added up; Visa uses its diluted as-converted class A count.

8 · Reverse DCF, scenarios and sensitivity

• Price-implied growth: the year-1 growth rate (same fade) at which the model value equals the price, holding everything else. Price-implied margin: the target margin that does the same at base-case growth. Implied cost of capital: the WACC at which the base case equals the price.
• Bear / bull: growth 5 percentage points lower/higher and target margin 20% lower/higher; cost of capital and capital intensity as in the base case.
• Why the gap? Where price and base case differ by more than 50%, the page names the assumption that would need to move least (measured in scenario steps: 5 points of growth, 20% of margin, 1 point of WACC) to reach the price.
• Sensitivity: value per share for WACC ±1 point and terminal growth up to 2 points below the base case.

Multiples, management, competitors

EV/EBITDA, P/E and P/S use TTM figures; EV includes lease liabilities. Management quotes are verbatim excerpts from the latest earnings release (Form 8-K, Exhibit 99.1); competitor moves are notable 8-K items of peers in the last 120 days, each linked to the filing.

Known limitations

• One mechanical model for all companies: it does not capture new businesses that are not yet visible in the numbers (for example autonomy or robotics), regulation, litigation or management quality.
• Book values proxy for the market value of debt; pension deficits and non-marketable equity investments are not included.
• Historical growth still contains acquisitions; the 25% cap and the fade limit their effect.
• The reference price is the last regular-session trade on IEX, not the official close of the primary exchange.

Changes

• 2.0 (25 Sept 2026): Damodaran-style FCFF engine (growth fade, margin convergence, sales-to-capital reinvestment, terminal ROIC); leases, minorities and preferred stock in the equity bridge; diluted shares; EBITA and operating capital without acquisition effects; reverse DCF as the headline; bear/base/bull scenarios. Version 1.0 extrapolated a three-year average free-cash-flow margin, which penalised companies in investment phases and ignored reinvestment in the terminal value.
• 1.0 (25 Sept 2026): first version (not publicly released).