§ 01
AAPL — Revenue Growth, Operating Margin, Net Margin. Open AAPL on the Ledge to see current values.
§ 02
FCF = Revenue × EBITDA Margin − Taxes − CapEx − Δ Working Capital
§ 03
| Scenario | Revenue Growth | EBITDA Margin | Use When |
|---|---|---|---|
| Bull case | Management’s optimistic targets | Peak historical margins | Everything goes right |
| Base case | Analyst consensus | Average recent margins | Most likely outcome |
| Bear case | Recession/competitive pressure | Trough margins | Stress test |
§ 04
Always project 3–5 scenarios, not one. A single-point DCF is a guess dressed up as math. The range between your bear and bull cases tells you how much uncertainty exists in the valuation.
§ 05
Pull up a company in **Fundamentals**. Find its EBITDA margin and CapEx as % of revenue for the last 3 years. Use these as inputs to project next year’s FCF.
§ 06
Your base case projects $150M FCF but your bull case projects $250M. What does this 67% gap tell you?
§ 07
§ 08
You're projecting free cash flow for a company. Historically they've grown revenue 8%/yr for 5 years and maintained 20% FCF margins. You project 10%/yr growth and 25% margins for the next 5 years. Is your forecast defensible?
Five questions · AI feedback
Sit with the ideas.
A company has $1B revenue growing at 10%/year, 25% EBITDA margin, and capex of 5% of revenue. What is Year 1 projected FCF (simplified)?
Why:
Try this in paper trading
DCF a stock — buy with margin of safety
Run a back-of-envelope DCF on a stock you've researched. Estimate fair value. Paper-buy ONLY if the current market price is at least 25% below your fair-value estimate. If it isn't, write down why you waited.
Open paper portfolio →Practice mode — simulated trades, not investment advice.