Dcf

Build a discounted cash flow (DCF) valuation for the company specified by the user: $ARGUMENTS

Before starting, read ../data-access.md for data access methods and ../design-system.md for formatting conventions. Follow the data access detection logic and design system throughout this skill.

Follow these steps:

1. Company Lookup

Look up the company by ticker using discover_companies. Capture:

• company_id
• latest_calendar_quarter — anchor for all period calculations below (see ../data-access.md Section 1.5)
• latest_fiscal_quarter
• Firm name for report attribution (default: "Daloopa") — see ../data-access.md Section 4.5

2. Market Data

Get market-side inputs for {TICKER} (see ../data-access.md Section 2 for how to source market data in your environment):

• Current price, market cap, shares outstanding, beta
• 10Y Treasury yield (risk-free rate for WACC)

If market data is unavailable, use reasonable defaults: beta=1.0, risk-free rate=4.5%, and note the assumptions.

3. Historical Financials from Daloopa

Calculate 8 quarters backward from latest_calendar_quarter. Pull:

• Revenue
• Operating Income
• Net Income
• Diluted EPS
• Operating Cash Flow
• Capital Expenditures
• Free Cash Flow (compute as OCF - CapEx, label "(calc.)")
• Depreciation & Amortization
• Tax expense and pre-tax income (for effective tax rate)
• Interest expense (for cost of debt)
• Total debt (short + long term)
• Cash and equivalents
• Shares outstanding

Also pull segment revenue and any available guidance series.

4. Calculate WACC

Cost of Equity (CAPM):

• Risk-free rate (Rf) = 10Y Treasury from market data
• Equity risk premium (ERP) = 5.5% (standard assumption)
• Beta from market data (or 1.0 default)
• Cost of equity = Rf + Beta × ERP

Cost of Debt:

• If interest expense and total debt available: Cost of debt = Interest Expense / Average Total Debt
• After-tax cost of debt = Cost of debt × (1 - effective tax rate)
• If not available, use 5.0% pre-tax as default

Capital Structure:

• Market cap for equity weight
• Total debt for debt weight
• WACC = (E/V) × Re + (D/V) × Rd × (1-t)

Show all inputs and the resulting WACC clearly.

5a. KPI-Driven Revenue Build (Preferred)

Before projecting top-down, attempt a bottoms-up revenue build using operational KPIs. This produces a significantly more defensible DCF — a top-down trend decay is a guess; a bottoms-up KPI build is analysis.

Discover segment and KPI data: Pull segment revenue breakdown + segment-specific KPIs for the target company. Use the sector taxonomy to know what to search for:

• SaaS/Cloud: ARR, net revenue retention, RPO/cRPO, customers >$100K, cloud gross margin
• Consumer Tech: DAU/MAU, ARPU, engagement metrics, installed base, paid subscribers
• E-commerce/Marketplace: GMV, take rate, active buyers/sellers, order frequency
• Retail: same-store sales, store count, average ticket, transactions
• Telecom/Media: subscribers, churn, ARPU, content spend
• Hardware: units shipped, ASP, attach rate, installed base
• Financial Services: AUM, NIM, loan growth, credit quality metrics, fee income ratio
• Pharma/Biotech: pipeline stage, patient starts, scripts, market share
• Industrials/Energy: backlog, book-to-bill, utilization, production volumes, reserves

Build bottoms-up projections per segment: For each segment with KPI data, project revenue using unit economics:

• Hardware segments: projected units × projected ASP
• Subscription segments: projected subscribers × projected ARPU (net of churn)
• Marketplace segments: projected GMV × projected take rate
• Services/recurring: apply growth rate informed by retention metrics and customer adds

Sum segment projections to get total revenue for each of 5 years. Show the build clearly so the reader can challenge individual segment assumptions.

Fall back to top-down if KPIs aren't available. If segment KPIs are sparse or unavailable, use the top-down approach in Section 5b instead, but note explicitly that the model is less reliable without bottoms-up drivers.

5b. Top-Down FCF Projections (Fallback)

Build 5-year FCF projections. If a projection engine is available (see ../data-access.md Section 5), use it. Otherwise, project manually:

• Revenue: Use management guidance for near-term, then decay toward 3% long-term growth
• FCF Margin: Use trailing average, adjust for any clear trends
• FCF = Projected Revenue × Projected FCF Margin

Show all assumptions clearly — this is the most judgment-intensive part. If using this fallback instead of the KPI-driven build (Section 5a), note the limitation.

6. Terminal Value

Calculate terminal value using perpetuity growth method:

• Terminal FCF = Year 5 FCF × (1 + terminal growth rate)
• Terminal Value = Terminal FCF / (WACC - terminal growth rate)
• Default terminal growth rate: 2.5-3.0% (should not exceed long-term GDP growth)
• Discount terminal value to present