Methodology
This page is limited to the valuation model itself.
Dashboard usage, controls, and output interpretation are covered in the FAQ.
- Fit a trend to recent quarterly net income.
- Generate many bootstrap forecast paths.
- Discount and floor each path.
- Convert expected equity value into a per-share estimate.
Forecast Foundation
Base Forecast
The model starts with quarterly net income history from the internal database.
It fits a regression to the most recent quarters selected by the regression window length and uses that trend as the base forward path.
Simulation and Valuation
Bootstrap Simulation
Historical deviations from the fitted trend are resampled into many randomized bootstrap paths.
This turns one regression line into a distribution of possible future net-income paths instead of a single deterministic forecast.
Loss Handling and Floor
Each simulated path is discounted quarter by quarter and accumulated into equity value.
If repeated losses would drive equity too far down, the path is floored at a configured minimum. In practice this acts as a bankruptcy-style downside cap rather than allowing losses to compound without limit.
Discounted Expected Income
After applying that floor, the model takes the average across the simulated paths.
That average represents the discounted expected income contribution over the full forecast horizon.
Estimated Fair Price
The discounted expected income is combined with the latest available balance-sheet snapshot, using assets minus liabilities as the starting equity base.
Dividing the resulting equity value by shares outstanding produces the estimated fair price per share.
Why Net Income
Why not free cash flow?
Standard DCF work usually uses free cash flow. FastDCF uses net income as a long-run proxy for cash earning power because it is available consistently across the dataset and, over long horizons, earnings and cash generation can be close enough to support comparative valuation.
What tradeoff does that create?
This is a practical simplification, not a claim that net income is universally better than free cash flow.
No single metric is perfect: free cash flow can swing sharply for reasons that do not always reflect the underlying business trend, while net income can be distorted by non-cash accounting items such as impairments.
When is the estimate less reliable?
The model treats net income as a scalable long-term proxy rather than a literal replacement for cash-flow analysis.
The estimate is more defensible when net income and free cash flow are not structurally diverging, and less reliable for businesses with unusual accounting, heavy reinvestment needs, or persistent gaps between earnings and cash generation.