Damodaran Equity Model

This tool is best used for growth companies

Target Ticker Symbol

Use Your Own Alpha Vantage API Key // shared key (rate-limited)

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// Stored in localStorage on this device only. Browser-direct fetch — your IP is the one seen by Alpha Vantage.

Valuation Context

Firm Type

Lifecycle Phase

Your Thesis // judgment inputs

No API gives you these. These inputs encode your view of where the company is going. Anchor on history, analyst consensus, and Damodaran's sector tables — the choice is yours. Damodaran data hub →

// fetch financials first, then generate (typically 30s–2 min; cached 1 week per ticker)

Stage 1 Rev Growth (%)

Stage 1 Duration (yrs)

ⓘ How to set growth + duration

Growth rate = your forecast of annual revenue growth for the first phase. Anchor on:

The company's last 3 fiscal years of growth.
Analyst consensus on Yahoo Finance ("Analysis" tab) or stockanalysis.com.
Management's own guidance from the latest 10-K / 20-F / earnings call.

Duration = how long this rate holds before fading to terminal growth (≈ risk-free rate). Default 5y. Wide-moat firms (Visa, ASML, ServiceNow) justify 7–10y; commodity businesses 2–3y.

Rough benchmarks:

Mature consumer staples: 3–6%
Mature financial / utility: 4–7%
Healthy software: 15–30%
Hyper-growth IPO: 30–60%

Target Op Margin (%)

ⓘ How to pick a target margin

The operating margin the company will achieve at maturity. Damodaran's rule: at the terminal year, margins revert toward the industry mean. A firm only sustains a premium if it owns a durable moat (Visa, ASML, Apple). Commoditized spaces (BNPL, online retail, generic SaaS) get dragged back to the cohort median.

Sector medians (Damodaran US, Jan 2026, pre-tax operating):

System & application software: ~33% (range 20–40%)
Internet software (mixed): ~4% median, mature winners 20–30%
Marketplaces (Booking, eBay, Airbnb): 25–40%
Payment networks (Visa, MA): 50–60%
Consumer finance / BNPL / specialty lenders: 8–15%
Non-bank financial services: ~18%
Mature retail: 5–8%
Auto / heavy industry: 5–12%

BNPL / consumer lender

Reclassified to non-financial for FCFF? Anchor on consumer-finance peers (~8–15% mature margin), not software or payment-network medians. Credit losses and funding costs scale with the loan book.

True deposit-taking bank? Switch Firm Type to Financial — use FCFE / excess-return, not op-margin DCF.

Damodaran's margin-by-sector table →

Sales-to-Capital

ⓘ What this means + sector benchmarks

For every $1 of new invested capital (equity + debt), how much new annual revenue does the business generate? Auto-prefilled from the matched sector.

Sector medians:

SaaS / vertical software: 1.5–2.5
Online retail: 2.5–3.5
Asset-light fintech (Wise, Adyen): 1.0–1.5
Securitized BNPL / forward-flow lenders: 1.0–1.5
Banks: 0.1–0.5 (deposit-funded, not equity)
Heavy industry: 0.5–1.0

Damodaran's capex-by-sector table →

Prob. of Failure (%)

Failure Recovery (%)

ⓘ How distress is modeled

Probability of failure = chance the company doesn't reach its mature state. Auto-computed from interest coverage when available; loss-makers and pre-profit firms always need a manual override.

Rule of thumb:

Profitable + IG credit: 0–5%
Loss-making, 2+ yr cash runway: 10–25%
Loss-making, <1 yr runway: 40%+

Recovery % = if the company fails, how much of book value comes back to shareholders?

Hard assets (manufacturing, real estate): 50–70%
Software / IP-heavy: 0–30%
Banks (regulatory wipe-out): 0–20%

Damodaran's distress paper (PDF) →

R&D Amortization Life (yrs)

ⓘ How long does R&D "pay back"?

How many years should past R&D spending be capitalized as an intangible asset before being fully amortized? Auto-prefilled from the matched sector.

Damodaran's defaults:

Software (rapid obsolescence): 3 years
Hardware / electronics: 5 years
Pharma / biotech (long approval): 10 years
Aerospace / defense: 10 years

Fair Value / Share

$0.00

Awaiting Data

Margin of Safety (20%)

$0.00

Target Buy Price

Cost of Capital (WACC)

0.00%

Levered Beta 0.00

Accounting vs. Economic Reality

—

GAAP Operating Income

$0m

Damodaran Adjusted EBIT

$0m

R&D / Leases Capitalized

10-Year Projected Free Cash Flow (FCFF)

IN MILLIONS USD

Live Data // API-fetched

Auto-populated from the API fetch at the top. Override only if the latest filing isn't yet indexed, or if you want to use a forward / normalized number.

Reported Revenue ($M) ?

Reported EBIT ($M)

Effective Tax (%) ?

Current Price ($)

Total Cash & Equiv. ($M)

Total Debt ($M)

Shares Outstanding (M)

Annual R&D Exp (Current Yr, $M)

Prior-Year R&D (For Asset Base) *recommended

// BLANK / NaN = assume flat at current (yields zero net EBIT adjustment). Explicit 0 is treated as 0.

R&D Y−1

R&D Y−2

R&D Y−3

R&D Y−4

Annual Op Lease ($M)

Lease Life (yrs)

Cost of Capital

Unlevered Beta

Risk-Free Rate (%)

Equity Risk Premium (%)

Country Risk Premium (%)

ⓘ Where these come from

Beta (unlevered) = sector-level asset beta. Auto-set from the matched Damodaran industry. Override if you have a strong view.

Risk-Free Rate = 10Y government bond yield in the SAME currency the company reports in. Damodaran's rule: Rf must match the cash-flow currency, NOT the listing country. ADRs (ASML, BABA, MELI) report in their functional currency.

USD → US 10Y (≈ 4.4%) — FRED
EUR → German Bund 10Y (≈ 2.5%)
GBP → UK Gilt 10Y (≈ 4.2%)
JPY → JGB 10Y (≈ 1.1%)
SEK → Swedish 10Y (≈ 2.4%)
CHF → Swiss Confed. 10Y (≈ 0.8%)

Note: the calculator hardcodes terminal growth g = riskFreeRate (Damodaran's structural cap — no firm can grow faster than its currency's economy forever). There is no separate terminal-growth input on purpose.

Equity Risk Premium = expected stock-market return over Rf. Damodaran's monthly "implied ERP" is the standard, currently ≈ 4.5%. Damodaran's ERP / CRP page →

Country Risk Premium = added for non-US firms. 0% for US, ≈ 0.5–1% for Western Europe, higher for emerging markets.