§ 01
| WACC ↓ / Growth → | 1.5% | 2.0% | 2.5% | 3.0% |
|---|---|---|---|---|
| 8% | $95 | $105 | $118 | $135 |
| 9% | $78 | $85 | $93 | $103 |
| 10% | $65 | $70 | $76 | $83 |
| 11% | $55 | $59 | $63 | $68 |
§ 02
If your target price only works with a specific WACC and growth rate combination, you’re speculating, not investing. Look for companies where most of the sensitivity table shows upside — that’s a genuine margin of safety.
§ 03
Build a simple sensitivity table for a company you’re analyzing. Vary WACC from 8–12% and terminal growth from 1.5–3%. How wide is the range?
§ 04
Your sensitivity table shows a range of $55–$135 per share. The stock trades at $70. Is this a buy?
§ 05
§ 06
Your DCF intrinsic value is $150/share. You ran sensitivity on WACC (±1%) and terminal growth (±0.5%). Range: $110-$210. Stock trades at $125. Decision?
Five questions · AI feedback
Sit with the ideas.
Your base case DCF gives a value of $120/share. Your bull case (lower WACC, higher growth) gives $180. Your bear case (higher WACC, lower growth) gives $75. The stock trades at $95. What is the most prudent conclusion?
Why: