Valuation Matrix
Multi-method valuation — triangulates fair value using DCF, reverse DCF, P/E, EV/EBITDA, FCF yield, and analyst consensus.
Methodology
DCF (30%)
Five years of projected free cash flows discounted at the company's WACC, plus a terminal value at 2.5% perpetuity growth. Bear / base / bull scenarios are computed simultaneously, so the output is a range anchored in cash-flow economics rather than a single point estimate.
P/E Multiple (20%)
Forward P/E using analyst consensus EPS, applied against bear / base / bull sector multiple ranges. Ranges are calibrated by market — the US baseline, HK discount, and A-share premium in Consumer / Healthcare all differ meaningfully — and auto-expand when the stock's actual multiple sits outside the reference range.
EV/EBITDA (20%)
Capital-structure-neutral valuation of the operating business. Most informative when comparing companies with different debt loads or in capital-intensive sectors where earnings are distorted by depreciation policy — it strips leverage and accounting differences out of the comparison.
FCF Yield (15%)
Cash-flow yield benchmarked against sector-specific reference ranges. Grounds the valuation in cash actually delivered to shareholders rather than reported earnings — the number that matters for dividends, buybacks, and deleveraging capacity, and the hardest one to manufacture accounting-wise.
Analyst Consensus (15%)
Sell-side 12-month price-target triangulation — low / median / high. A check against the community of analysts covering the name, intentionally weighted light so it informs rather than drives the verdict.
Reverse DCF — market expectations
Solves backwards from today's market cap for the implied FCF growth rate that justifies the price. Comparing the implied growth to analyst consensus and historical CAGR answers "is the market optimistic, pessimistic, or aligned?" — independent of any multiple judgment, and often the single most useful output.
Weighted verdict
All methods with data contribute; missing methods (e.g., financials drop DCF / EV-EBITDA / FCF Yield, leaning on P/E + Analyst) redistribute weight proportionally. The base-case upside maps to Strong Buy (> 30%) / Buy (> 15%) / Hold / Reduce / Sell — a calibrated decision, not a standalone number.
Example prompts
- “What price does NVDA need to grow into, and what is the street implying?”
- “Run a multi-method valuation on META — bear / base / bull scenarios.”
- “Is Costco’s premium justified? Show me the implied growth rate.”
- “Is AMZN cheap or expensive on a capital-structure-neutral basis?”