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Nvidia
Estimated Fair Value$241.45
Current Price$229.28
Valuation Gap5.3%
Historical Median P/FCF46.01x
Current P/FCF43.69x
Price-to-Free Cash Flow (P/FCF)
For informational and educational purposes only • Not investment advice.
Compare P/FCF valuations across companies
Apple
Estimated Fair Value$239.88
Current Price$336.64
Valuation Gap-28.7%
Historical Median P/FCF25.78x
Current P/FCF36.17x
Alphabet
Estimated Fair Value$127.52
Current Price$351.66
Valuation Gap-63.7%
Historical Median P/FCF29.00x
Current P/FCF79.98x
Microsoft
Estimated Fair Value$294.64
Current Price$535.07
Valuation Gap-44.9%
Historical Median P/FCF32.67x
Current P/FCF59.34x
Selected P/FCF
What is Price-to-Free Cash Flow (P/FCF) Valuation?
Price-to-Free Cash Flow (P/FCF) Valuation estimates a company's Fair Value based on its Free Cash Flow and the P/FCF multiple applied to that cash flow.
The P/FCF ratio compares a company's equity value with its Free Cash Flow. It shows how much investors are paying for the cash generated by the business after capital expenditures.
Historical P/FCF multiples show the valuation levels at which the company's equity has traded in the past. They can be used as a reference for estimating Fair Equity Value from Free Cash Flow.
P/FCF Valuation is most useful for companies with positive and relatively stable Free Cash Flow, but it may be less reliable when cash generation is highly volatile or changes materially over time.
How the P/FCF Model Works
The P/FCF model estimates fair value by calculating the company's historical P/FCF multiples, selecting a valuation multiple, applying it to Free Cash Flow, and converting the resulting Fair Equity Value into a Fair Value per Share.
Calculate
Historical P/FCF
→
Select the
P/FCF Multiple
→
Estimate Fair
Value Per Share
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Compare With
Current Valuation
P/FCF Formula
Key Model Assumptions
• The company must have positive Free Cash Flow.
• Free Cash Flow is based on trailing twelve-month (TTM) results when four consecutive quarterly periods are available; otherwise, the latest annual Free Cash Flow is used.
• Historical P/FCF multiples require positive Free Cash Flow and valid share price and shares outstanding data.
• The 10 most recent valid historical P/FCF multiples are used to estimate the company's typical valuation multiple.
• The historical median P/FCF forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median P/FCF.
• Historical P/FCF multiples may not remain representative if the company's cash generation or business performance changes materially.
• Free Cash Flow is based on trailing twelve-month (TTM) results when four consecutive quarterly periods are available; otherwise, the latest annual Free Cash Flow is used.
• Historical P/FCF multiples require positive Free Cash Flow and valid share price and shares outstanding data.
• The 10 most recent valid historical P/FCF multiples are used to estimate the company's typical valuation multiple.
• The historical median P/FCF forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median P/FCF.
• Historical P/FCF multiples may not remain representative if the company's cash generation or business performance changes materially.
Step 1 — Calculate Historical P/FCF Multiples
Historical Market Capitalization = Historical Price × Historical Shares Outstanding
Historical P/FCF = Historical Market Capitalization / Historical Free Cash Flow
Historical Median P/FCF = Median of the 10 most recent valid historical P/FCF multiples
Historical P/FCF = Historical Market Capitalization / Historical Free Cash Flow
Historical Median P/FCF = Median of the 10 most recent valid historical P/FCF multiples
The model calculates historical market capitalization by multiplying the historical share price by historical shares outstanding. It then divides historical market capitalization by historical Free Cash Flow. The median of the 10 most recent valid P/FCF multiples represents the company's typical historical valuation multiple.
Step 2 — Select the Valuation Multiple
Selected P/FCF = Historical Median P/FCF × Scenario Adjustment
The selected scenario adjusts the company's median historical P/FCF multiple to reflect a more conservative or optimistic valuation assumption. Because the adjustment is relative, each company retains its own historical valuation base.
Step 3 — Estimate Fair Value per Share
Fair Equity Value = Free Cash Flow × Selected P/FCF
Fair Value per Share = Fair Equity Value / Shares Outstanding
Fair Value per Share = Fair Equity Value / Shares Outstanding
The selected P/FCF multiple is applied to Free Cash Flow to estimate Fair Equity Value. The resulting equity value is divided by Shares Outstanding to estimate Fair Value per Share.
Step 4 — Compare With the Current Market Valuation
Current P/FCF = Current Market Capitalization / Free Cash Flow
Valuation Gap = Fair Value per Share / Current Price − 1
Valuation Gap = Fair Value per Share / Current Price − 1
Current P/FCF shows the multiple currently assigned to the company's Free Cash Flow, while the Valuation Gap compares the estimated Fair Value with the current stock price.