The estimated intrinsic value of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) using a 20-year Discounted Cash Flow (DCF) model is $24.02 (based on the recommended Free Cash Flow method), compared to the current stock price of $164.90. This suggests the stock may be overvalued by 85.4% relative to its intrinsic value.
The model uses a growth rate of 80% for years 1-5, 50% for years 6-10, and 4% as the terminal rate, with a discount rate of 5.87% (CAPM-derived from beta of 1.04). Intrinsic values across all methods: Operating Cash Flow (OCF): $58.02 | Free Cash Flow (FCF): $0.73 | Net Income (NI): $1.28.
DCF-20 Year
VTSAX
Intrinsic Value Calculator —
Vanguard Total Stock Market Index Fund Admiral Shares
USD164.90
▲ 1.12%
⚠ Currency conversion applied —
Financials reported in INR, converted to USD at 1 INR = 0.0108 USD. IV and cash flow figures are shown in USD.
Recommended: Operating Cash Flow exceeds 786% of Net Income. This gap is typically caused by large Depreciation & Amortization (D&A) charges being added back to Net Income when computing Operating Cash Flow — meaning Vanguard Total Stock Market Index Fund Admiral Shares has significant Capital Expenditure (Capex). Because Depreciation & Amortization (D&A) is a non-cash charge — Vanguard Total Stock Market Index Fund Admiral Shares already spent the cash buying the asset years ago, but the accounting cost is spread across many years — Operating Cash Flow adds it back and appears higher than actual cash profitability. Free Cash Flow (Operating Cash Flow minus Capital Expenditure) removes this effect and reflects the actual cash left over after maintaining and growing the asset base. Recommend to Use: Discounted Free Cash Flow.
Operating Cash Flow (M)TTM
USD
Total Debt (M)
USD
Cash & Investments (M)
USD
Discount Rate (%)
%
r = RFR + β × MRP
= 2.43% + 1.04 × 3.31%
= 5.87%
RFR2.43%Risk-Free Rate (government bond yield) · US market
MRP3.31%Market Risk Premium (expected excess return over RFR)
β1.04 Beta: stock volatility relative to market (5-year monthly regression vs S&P 500)
Shares Outstanding (M)
Growth Rate
Year 1–5 (%)
%
Year 6–10 (%)
%
Year 11–20 (%)
%
UndervaluedOvervalued
Intrinsic value USD —
Intrinsic Price
USD —
Stock Price
USD 164.90
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20-Year DCF Breakdown
Year
Projected CF (M)
Discount Factor
Present Value (M)
Discounted Cash Flow over 20 years using Operating Cash Flow as the base metric, projected across three growth phases and discounted to present value.
High Growth Phase — Years 1–5
The company is assumed to be in its strongest growth period. Cash flows are projected at the highest rate g₁, reflecting rapid expansion, market share gains, or strong earnings momentum over the next 5 years.
Transition Phase — Years 6–10
Growth begins to moderate as the business matures and competition intensifies. Cash flows in years 6–10 are projected at a lower rate g₂, bridging the gap between early explosive growth and long-term stability.
Terminal Phase — Years 11–20
The company is assumed to be fully mature, growing in line with the broader economy. The terminal growth rate g₃ (typically 3–4%, close to long-run GDP growth) is applied to years 11–20, representing sustainable perpetual growth.
IVIntrinsic Value per share — the estimated true worth of one share based on discounted future cash flows over 20 years
OCF0Operating Cash Flow — cash generated from core business operations, including D&A, before capital expenditures
g1High growth rate (Yr 1–5) — auto-calculated from 3-year historical CAGR of cash flows; adjust based on your outlook
g2Transition growth rate (Yr 6–10) — typically 60% of g₁, reflecting slowing momentum as the business matures
g3Terminal growth rate (Yr 11–20) — long-run sustainable growth, typically 3–4% matching nominal GDP growth
DTotal Debt — sum of short-term and long-term borrowings; deducted from IV because debt is a prior claim on cash flows
CCash & Short-term Investments — liquid assets held by the company; added back to IV as they belong directly to shareholders
NShares Outstanding — divides total company value into per-share terms, making it directly comparable to the market price
Same 20-year DCF structure using Free Cash Flow (Operating Cash Flow minus CapEx) — reflects cash actually available to shareholders after reinvestment.
High Growth Phase — Years 1–5
Free cash flow projected at the highest rate g₁ for years 1–5, capturing the company's peak earnings expansion period.
Transition Phase — Years 6–10
FCF growth slows to g₂ in years 6–10, reflecting business maturation and increasing competition eroding excess returns.
Terminal Phase — Years 11–20
FCF grows at the terminal rate g₃ (≈ GDP growth) for years 11–20, representing the steady-state long-run rate a mature business can sustain.
FCF0Free Cash Flow = Operating Cash Flow − CapEx. Represents cash truly available to shareholders after reinvestment needed to maintain the business
D, C, NTotal Debt, Cash & Investments, Shares Outstanding — same definitions as OCF method
Same 20-year DCF using Net Income as the base metric. Suitable for asset-light businesses where earnings closely track distributable value.
High Growth Phase — Years 1–5
Net income projected at the highest rate g₁ for years 1–5. Best suited for asset-light companies (software, financials, consumer brands) where net income closely tracks shareholder value.
Transition Phase — Years 6–10
Earnings growth decelerates to g₂ in years 6–10 as profit margins normalise and competitive moats are tested.
Terminal Phase — Years 11–20
Earnings grow at terminal rate g₃ for years 11–20. This phase often dominates total present value, so the choice of terminal rate significantly impacts the final IV estimate.
NI0Net Income = Revenue − all expenses, interest & taxes. For asset-light companies, NI closely approximates distributable cash to shareholders
g1, g2, g3Three-phase Net Income growth rates, auto-calculated from historical earnings CAGR
