Skills

Value a Real Company Using DCF or Comparable Analysis

10 weeks · 0 milestones

Perform a full valuation of a real publicly traded or recently acquired company using either a discounted cash flow model or comparable company analysis — with fully documented assumptions, sensitivity analysis showing how the valuation changes under different scenarios, and an explicit investment thesis or price target conclusion. The valuation must be for a real company using real financial data. Proof requires review by a finance professional or university finance faculty member who can confirm the methodology is technically correct and the assumptions are documented.

Part of: Business · Proves for: UG

Milestone map

3 milestones

Select a Company and Build the DCF Model Foundation

3–4 weeks

Select a real publicly listed company and build the foundation of a Discounted Cash Flow (DCF) valuation. Gather the last five years of financial statements from the company's actual filings (10-K or Annual Report). Project free cash flows for the next five years based on stated assumptions grounded in historical performance and industry analysis.

Proof required

Submit: (a) the selected company and links to the actual financial filings used, (b) a five-year historical financial summary showing revenue, EBITDA, capital expenditure, and free cash flow, and (c) a five-year FCF projection with all key assumptions stated explicitly — revenue growth rates, EBITDA margins, capex intensity — with rationale for each assumption referenced to historical performance or industry benchmarks.

What gets checked

Financial data is from actual company filings — not from a financial data aggregator that may have adjustment methodologies
All projection assumptions are stated explicitly with rationale
FCF definition is consistent (unlevered vs. levered is stated)

Common mistakes

Assuming revenue growth rates significantly above historical performance without specific justification
Not distinguishing between unlevered and levered free cash flow — these produce different valuations with different discount rates

Resources

What a verifier looks for

Review the FCF projections: are the growth assumptions within the range of the company's historical performance and industry norms? Wildly optimistic assumptions should be challenged with 'What would need to be true for this growth rate to occur?'
Check that the FCF definition is consistent with the discount rate chosen — unlevered FCF discounted at WACC; levered FCF discounted at cost of equity.

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Calculate WACC and Derive the Intrinsic Value with Sensitivity Analysis

2–3 weeks

Calculate the Weighted Average Cost of Capital (WACC) for the company using the Capital Asset Pricing Model (CAPM) for the cost of equity. Apply the terminal value (Gordon Growth Model or exit multiple). Derive the intrinsic value per share. Build a sensitivity analysis showing how the valuation changes under different WACC and growth rate assumptions.

Proof required

Submit: (a) the WACC calculation showing risk-free rate, equity risk premium, beta, cost of debt, and weights with sources for each input, (b) the terminal value calculation with explicit terminal growth rate rationale, (c) intrinsic value per share with comparison to current market price, and (d) a sensitivity analysis matrix showing intrinsic value across a range of WACC (±1%) and terminal growth rate (±0.5%) assumptions.

What gets checked

WACC inputs are sourced — beta from a reputable source, risk-free rate from current government bond yields
Terminal growth rate is justified with reference to the long-term GDP growth rate
Sensitivity matrix covers a meaningful range — not just ±0.1%

Common mistakes

Using a terminal growth rate higher than the long-term GDP growth rate without justification — a company cannot grow faster than the economy in perpetuity
Using a historical beta without considering whether it is representative of the company's current risk profile

Powstik Guide

A WACC calculation and a DCF value with sensitivity.

Steps

Source each WACC input and cite it.
Discount your forecast cash flows.
Add a terminal value.
Vary WACC and growth in a table.

Template

Risk-free:        ERP:        Beta:
Cost of debt:        Weights:
WACC:
Intrinsic value per share:
Sensitivity (WACC × growth):

What gets sent back

Inputs without sources.
No sensitivity table.
Terminal value unexplained.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Challenge the WACC: 'Your beta is 1.2 — where did you source this? Is the levered or unlevered beta appropriate for this model?' The answer reveals whether the submitter understands the mechanics.
Check the sensitivity matrix: does the range of implied values span a meaningful range? If the intrinsic value barely changes across ±1% WACC, the model may have an error in the discount structure.

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Present Valuation to a Finance Professional and Defend Assumptions

1 week

Present the DCF valuation to a finance professional (investment analyst, corporate finance professional, CFO, or finance academic) who will challenge at least two key assumptions. Document the challenges, your responses, and any revisions.

Proof required

Submit: (a) a one-page valuation summary (investor memo format) summarising the investment thesis and key valuation outputs, (b) a Q&A log from the review session (minimum 400 words with at least two challenges to specific assumptions and your responses), and (c) attendance record with reviewer name and credentials.

What gets checked

Valuation summary states a clear investment thesis — not just a table of numbers
Q&A log shows challenges to model assumptions, not just requests for clarification
Reviewer has finance or investment analysis credentials

Common mistakes

Valuation summary reports intrinsic value without a recommendation or investment thesis
Review session with someone without finance expertise who cannot challenge the WACC or terminal value methodology

Powstik Guide

A one-page investment memo, defended to a finance professional.

Steps

Write the thesis first: buy, hold or avoid, and why.
Build a sensitivity table for discount rate and terminal growth.
Check your terminal growth against the economy's long-run rate.
Book an analyst, corporate finance professional or CFO.
Ask them to challenge your two most sensitive assumptions.
Log the session and note any revision.

Template

One-page memo
Thesis (one sentence):
Intrinsic value per share:     Current price:     Upside/downside:
Three drivers of value:
Biggest risk:
Sensitivity: value at discount rate ±1% and terminal growth ±0.5%

Review session log
Date:            Duration:
Reviewer name:
Reviewer role and years of experience:

Challenge 1 (a valuation assumption):
  What they asked:
  My answer:
  Did it hold? What would I change?

Challenge 2:
  What they asked:
  My answer:
  Did it hold? What would I change?

Change I made after the session:
Reviewer's overall view (their words):

What gets sent back

A value with no recommendation or thesis.
A reviewer who cannot challenge the discount rate or terminal value.
Challenges limited to clarifying questions.

Resources

Foundationstart here

Depthgo deeper

What a verifier looks for

Your most valuable challenges probe the assumptions that drive the most valuation sensitivity: 'Your model is most sensitive to terminal growth rate — what evidence supports this rate, and what if you applied the current 10-year GDP consensus instead?'
Provide written confirmation (minimum 150 words) of your finance credentials and the specific assumptions you challenged.

You'll sign in first, then come straight back here.

Part of

Prove Your Corporate Finance Chops →Business Administration 3: Finance →

Related outcomes

Milestone map

3 milestones

Select a Company and Build the DCF Model Foundation

3–4 weeks

Proof required

What gets checked

Financial data is from actual company filings — not from a financial data aggregator that may have adjustment methodologies
All projection assumptions are stated explicitly with rationale
FCF definition is consistent (unlevered vs. levered is stated)

Common mistakes

Assuming revenue growth rates significantly above historical performance without specific justification
Not distinguishing between unlevered and levered free cash flow — these produce different valuations with different discount rates

Resources

What a verifier looks for

Review the FCF projections: are the growth assumptions within the range of the company's historical performance and industry norms? Wildly optimistic assumptions should be challenged with 'What would need to be true for this growth rate to occur?'
Check that the FCF definition is consistent with the discount rate chosen — unlevered FCF discounted at WACC; levered FCF discounted at cost of equity.

You'll sign in first, then come straight back here.

Calculate WACC and Derive the Intrinsic Value with Sensitivity Analysis

2–3 weeks

Proof required

What gets checked

WACC inputs are sourced — beta from a reputable source, risk-free rate from current government bond yields
Terminal growth rate is justified with reference to the long-term GDP growth rate
Sensitivity matrix covers a meaningful range — not just ±0.1%

Common mistakes

Using a terminal growth rate higher than the long-term GDP growth rate without justification — a company cannot grow faster than the economy in perpetuity
Using a historical beta without considering whether it is representative of the company's current risk profile

Powstik Guide

A WACC calculation and a DCF value with sensitivity.

Steps

Source each WACC input and cite it.
Discount your forecast cash flows.
Add a terminal value.
Vary WACC and growth in a table.

Template

Risk-free:        ERP:        Beta:
Cost of debt:        Weights:
WACC:
Intrinsic value per share:
Sensitivity (WACC × growth):

What gets sent back

Inputs without sources.
No sensitivity table.
Terminal value unexplained.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Challenge the WACC: 'Your beta is 1.2 — where did you source this? Is the levered or unlevered beta appropriate for this model?' The answer reveals whether the submitter understands the mechanics.
Check the sensitivity matrix: does the range of implied values span a meaningful range? If the intrinsic value barely changes across ±1% WACC, the model may have an error in the discount structure.

You'll sign in first, then come straight back here.

Present Valuation to a Finance Professional and Defend Assumptions

1 week

Proof required

What gets checked

Valuation summary states a clear investment thesis — not just a table of numbers
Q&A log shows challenges to model assumptions, not just requests for clarification
Reviewer has finance or investment analysis credentials

Common mistakes

Valuation summary reports intrinsic value without a recommendation or investment thesis
Review session with someone without finance expertise who cannot challenge the WACC or terminal value methodology

Powstik Guide

A one-page investment memo, defended to a finance professional.

Steps

Write the thesis first: buy, hold or avoid, and why.
Build a sensitivity table for discount rate and terminal growth.
Check your terminal growth against the economy's long-run rate.
Book an analyst, corporate finance professional or CFO.
Ask them to challenge your two most sensitive assumptions.
Log the session and note any revision.

Template

One-page memo
Thesis (one sentence):
Intrinsic value per share:     Current price:     Upside/downside:
Three drivers of value:
Biggest risk:
Sensitivity: value at discount rate ±1% and terminal growth ±0.5%

Review session log
Date:            Duration:
Reviewer name:
Reviewer role and years of experience:

Challenge 1 (a valuation assumption):
  What they asked:
  My answer:
  Did it hold? What would I change?

Challenge 2:
  What they asked:
  My answer:
  Did it hold? What would I change?

Change I made after the session:
Reviewer's overall view (their words):

What gets sent back

A value with no recommendation or thesis.
A reviewer who cannot challenge the discount rate or terminal value.
Challenges limited to clarifying questions.

Resources

Foundationstart here

Depthgo deeper

What a verifier looks for

Your most valuable challenges probe the assumptions that drive the most valuation sensitivity: 'Your model is most sensitive to terminal growth rate — what evidence supports this rate, and what if you applied the current 10-year GDP consensus instead?'
Provide written confirmation (minimum 150 words) of your finance credentials and the specific assumptions you challenged.

You'll sign in first, then come straight back here.