Dcf Valuation Skill for Claude

Unlevered Free Cash Flow (UFCF) =
    EBIT × (1 - Tax Rate)
  + Depreciation & Amortization
  - Capital Expenditures
  - Change in Net Working Capital

WACC = (E/V × Re) + (D/V × Rd × (1 - Tc))

Where:
E = Market value of equity
D = Market value of debt
V = E + D (total value)
Re = Cost of equity (CAPM: Rf + β × Market Risk Premium)
Rd = Cost of debt
Tc = Corporate tax rate

Re = Rf + β × (Rm - Rf)

Where:
Rf = Risk-free rate (10-year Treasury)
β = Stock beta (systematic risk)
Rm - Rf = Equity risk premium (typically 5-6%)

Terminal Value = FCF(n+1) / (WACC - g)

Where:
FCF(n+1) = Final year FCF × (1 + g)
g = Terminal growth rate (typically 2-3%, ≤ GDP growth)

Terminal Value = EBITDA(n) × Exit Multiple

Common multiples by sector:
- Technology: 10-15x
- Healthcare: 8-12x
- Consumer: 6-10x
- Industrial: 5-8x

Enterprise Value = Σ [FCF(t) / (1 + WACC)^t] + [TV / (1 + WACC)^n]

Equity Value = Enterprise Value - Net Debt + Cash

Intrinsic Value per Share = Equity Value / Shares Outstanding

# DCF Valuation Model: [Company Name]

**Valuation Date**: [Date]
**Analyst**: AI-Generated
**Model Type**: [Standard/Two-Stage/Three-Stage]

---

## Executive Summary

| Metric | Value |
|--------|-------|
| **Intrinsic Value per Share** | $XX.XX |
| **Current Market Price** | $XX.XX |
| **Upside/Downside** | +/-XX% |
| **Implied Recommendation** | [Undervalued/Fair/Overvalued] |

---

## Key Assumptions

### Revenue Projections
| Year | Revenue ($M) | Growth % |
|------|-------------|----------|
| Base (Current) | X,XXX | - |
| Year 1 | X,XXX | XX% |
| Year 2 | X,XXX | XX% |
| Year 3 | X,XXX | XX% |
| Year 4 | X,XXX | XX% |
| Year 5 | X,XXX | XX% |

### Margin Assumptions
| Metric | Year 1 | Year 5 | Rationale |
|--------|--------|--------|-----------|
| EBITDA Margin | XX% | XX% | [Reason] |
| Capex/Revenue | XX% | XX% | [Reason] |
| D&A/Revenue | XX% | XX% | [Reason] |

### WACC Calculation
| Component | Value | Source/Assumption |
|-----------|-------|-------------------|
| Risk-free Rate | X.X% | 10-Year Treasury |
| Beta | X.XX | Bloomberg/Calculated |
| Equity Risk Premium | X.X% | Historical average |
| Cost of Equity | XX.X% | CAPM |
| Cost of Debt | X.X% | Credit spread |
| Tax Rate | XX% | Effective rate |
| Debt/Total Capital | XX% | Current structure |
| **WACC** | **X.X%** | |

### Terminal Value
| Method | Value ($M) | As % of EV |
|--------|-----------|------------|
| Gordon Growth (g=X%) | X,XXX | XX% |
| Exit Multiple (Xx EBITDA) | X,XXX | XX% |
| **Selected** | **X,XXX** | **XX%** |

---

## Free Cash Flow Projections

| ($M) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Terminal |
|------|--------|--------|--------|--------|--------|----------|
| Revenue | | | | | | |
| EBITDA | | | | | | |
| (-) D&A | | | | | | |
| EBIT | | | | | | |
| (-) Taxes | | | | | | |
| NOPAT | | | | | | |
| (+) D&A | | | | | | |
| (-) Capex | | | | | | |
| (-) ΔNWC | | | | | | |
| **UFCF** | | | | | | |

---

## Valuation Summary

| Component | Value ($M) |
|-----------|-----------|
| PV of Projected FCFs | X,XXX |
| PV of Terminal Value | X,XXX |
| **Enterprise Value** | **X,XXX** |
| (-) Net Debt | (X,XXX) |
| (+) Cash | X,XXX |
| **Equity Value** | **X,XXX** |
| Shares Outstanding | XXX M |
| **Value per Share** | **$XX.XX** |

---

## Sensitivity Analysis

### WACC vs Terminal Growth Rate

| WACC ↓ / g → | 1.5% | 2.0% | 2.5% | 3.0% |
|--------------|------|------|------|------|
| 8.0% | $XX | $XX | $XX | $XX |
| 8.5% | $XX | $XX | $XX | $XX |
| 9.0% | $XX | $XX | **$XX** | $XX |
| 9.5% | $XX | $XX | $XX | $XX |
| 10.0% | $XX | $XX | $XX | $XX |

### Key Drivers Impact

| Assumption Change | Impact on Value |
|-------------------|-----------------|
| WACC +1% | -XX% |
| Terminal Growth +0.5% | +XX% |
| Revenue CAGR +2% | +XX% |
| EBITDA Margin +2% | +XX% |

---

## Risks to Valuation

1. **Model Risk**: DCF highly sensitive to WACC and terminal growth assumptions
2. **Execution Risk**: Projected growth may not materialize
3. **Market Risk**: Multiple compression in downturn
4. **[Company-Specific Risk]**: [Detail]

---

## Disclaimer

This valuation model is for educational and informational purposes only. It does not constitute investment advice. The intrinsic value estimate is based on assumptions that may not reflect reality.

Build a DCF model for a SaaS company with:
- Current revenue: $500M
- Revenue growth: 25% declining to 15% over 5 years
- EBITDA margin: 20% improving to 30%
- Current stock price: $45
- Shares outstanding: 100M