Simplest DCF possible
If you want to do a DCF analysis, you are going to need a complicated Excel file, right? Not necessarily! If you keep it simple, you and a calculator can easily do the job.
In the case of a mature company that generates stable cash flows, like telecom company Verizon, you can easily find estimates of free cash flow as well as WACC on the internet.
What if this free cash flow is a perpetuity? A constant stream of identical cash flows with no end. The same number each and every year until the end of time.
In that case, you can divide $21B by 0.07 to get to an enterprise value of $300B. Enterprise value plus cash minus debt gets you to equity value. Equity value divided by the number of shares is the DCF target share price of $36.
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