My DCF Calculator Approach for Finding Undervalued Stocks Without Overpaying

Been refining my DCF process and wanted to share thoughts on terminal value assumptions because I think most retail investors get this part completely wrong.

Using perpetual growth rates that are too optimistic obviously inflates intrinsic value calculations. For something like Dollar General right now with margin compression and Walmart competition, I'm using 1.5% terminal growth even though consensus would say 2.5%. Stock looks interesting around $85 but my DCF keeps spitting out fair value closer to $78 with realistic margin assumptions.

Running models through valuesense has been helpful for sanity checking inputs against historical data. A 50 basis point difference in WACC completely changes whether something screens as undervalued or not.

For retailers specifically, digging into same store sales trends before assuming growth normalization is essential. Companies that look cheapest on P/E often have the most questionable growth assumptions baked in.