Earnings Per Share (EPS)

DCF (Discounted Cash Flow)

A valuation method that estimates the present value of an investment based on its expected future cash flows, discounted back at an appropriate rate. It is a cornerstone of intrinsic value analysis used by both buy-side and sell-side analysts to determine whether a stock is overvalued or undervalued relative to its fundamentals.

WACC (Weighted Average Cost of Capital)

The blended rate a company is expected to pay to finance its assets, weighted by the proportion of debt and equity in its capital structure. Used as the discount rate in DCF models. A lower WACC implies lower risk and higher present value of future cash flows.

EV/EBITDA

A valuation multiple comparing a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization. Widely used for comparing companies across different capital structures because it neutralizes the effects of financing and accounting decisions.

Free Cash Flow (FCF)

The cash a company generates after accounting for capital expenditures needed to maintain or expand its asset base. A key metric for evaluating a company's ability to return value to shareholders through dividends, buybacks, or debt reduction.

Intrinsic Value

The perceived true value of a security based on fundamental analysis, independent of its current market price. When the market price is below intrinsic value, the stock may be considered undervalued — creating a potential margin of safety for investors.

Terminal Value

The estimated value of a business beyond the explicit forecast period in a DCF model, typically calculated using a perpetuity growth method or exit multiple. Often represents 60-80% of total DCF value, making growth rate assumptions critical to the final valuation.