Economics
Discounted Cash Flow (DCF)
Quick fact
A DCF analysis can reveal that a company trading at a high stock price may actually be undervalued if its future cash flows are expected to grow rapidly—and vice versa.
Why this is interesting
Imagine you're offered $100 today or $100 a year from now. Most would take the money today—because money has time value. Discounted cash flow (DCF) is the method that quantifies that intuition.