reverse-dcf

Reverse DCF valuation, implied growth rate, market expectations analysis, reverse discounted cash flow, implied valuation assumptions, market-implied projections, DCF sanity check

SKILL.md

GitHub

Reverse DCF — Market-Implied Expectations

Starts from the current stock price and solves backward: "What growth rate, margin, or WACC does the market currently price in?" Answers: "Is the market too optimistic or too pessimistic about {ticker}?" This is a sanity-check tool used by professional analysts to test whether consensus assumptions are already reflected in the stock price.

Preflight

Run canonical pre-flight per contracts/preflight.md.

Include the X-Agentii-Trace header on every tool call per contracts/x-agentii-trace-header.md — carry the _run_id from your first tool result and name yourself (and your parent, if you were spawned).

Triggers

  • reverse DCF {ticker}
  • implied growth rate {ticker}
  • what does the market price in {ticker}
  • market-implied valuation {ticker}
  • reverse discounted cash flow {ticker}
  • is {ticker} priced for perfection
  • market expectations DCF {ticker}
  • sanity check valuation {ticker}
  • implied assumptions {ticker}
  • DCF reverse engineer {ticker}

Defaults

Parameter Default Notes
projection_years 5 Explicit forecast period
solve_for growth_rate growth_rate, terminal_margin, or wacc
terminal_growth 2.5% Long-term GDP-like growth rate
compare_to consensus Compare implied to consensus estimates

Methodology

Retrieval Scope

structured_only — Reverse DCF uses current price + XBRL financials + consensus estimates.

Retrieval Strategy

See contracts/retrieval.md for the canonical decision tree; skill-specific retrieval detail is in references/methodology.md.

Temporal Scope

Default lookback: 4 fiscal quarter(s); maximum: 12. The default balances recency against the trend window this analysis requires.

Tool Allowlist

Per frontmatter allowed_tools:

  • search_xbrl_facts — primary structured financial facts (is_primary default)
  • get_realtime_quote — latest market price for valuation cross-checks
  • search_earnings_calendar — EPS actual/estimate/surprise + report dates

Protocol

Step-by-step execution detail is in references/methodology.md.

Reverse DCF & PVGO: When quantifying expectations embedded in the current stock price, apply the methodology in references/reverse-dcf-methodology.md. Solve for implied growth/WACC/margin assumptions, decompose enterprise value into Steady-State Value vs. PVGO, and apply the One Job expectations gap framework to structure the variant view. The Reverse DCF is an expectations diagnostic, not a valuation tool.

Output File

Write the final deliverable to {ticker}/{YYYY-MM-DD_HHMM}_reverse-dcf_{affix}.md.

Output Structure

The deliverable is a structured markdown report written to the path in ## Output File. Full section-by-section template (headings, tables, and field definitions) lives in references/output-structure.md. Required elements:

  1. Executive Summary — headline conclusions (≤200 words).
  2. Core analysis sections — per this skill's methodology and analyst modes.
  3. Data classification — tag findings [FACT] / [DEDUCTED] / [VIEW] per contracts/snapshot-synthesis.md.
  4. Coverage Gaps & Citations — inline /v/ citations are PRIMARY (immediately after each fact); the bottom Citations section is a non-duplicative roll-up index.
  5. Output frontmatter — emit the FR-090 structured block per contracts/output-frontmatter-schema.md.

Citations & memory: follow contracts/citation-and-memory.md — ≥1 citation per 200 words; every material fact, table row, and metric is immediately followed by its inline clickable https://agentii.ai/v/{ticker}/{citation_id}/{N} link; a bottom Citations section provides a non-duplicative roll-up index; the closing TUI reply includes a compact Key Citations list (headline 5–10 facts) of clickable /v/ URLs; and append the run to agentii.md per contracts/agentii-md-schema.md.

Validation Gates

  1. Convergence: DCF must converge to market price within 1% within 50 iterations. If failed: flag "DCF does not converge — extreme assumptions required."
  2. Economic plausibility: implied growth rate must be between -10% and +50%. If failed: flag "Implied growth outside economically plausible range — market may be pricing non-fundamental factors."

Memory & Snapshot

  • Memory load (pre-flight): load prior workspace context for the ticker before retrieval — see contracts/memory-load.md.
  • Structured output frontmatter: emit the FR-090 block (key_metrics, conclusions, facts_count, deducted_count, views_count, citation_count) per contracts/output-frontmatter-schema.md.
  • Snapshot synthesis: after writing the deliverable, update the two-tier snapshot and classify findings as [FACT]/[DEDUCTED]/[VIEW] — see contracts/snapshot-synthesis.md.
  • Session archival: record the run under sessions/{YYYY-MM-DD}/ and update sessions/INDEX.md per contracts/session-format.md.

Final Summary (TUI)

End the closing chat reply with a compact Key Citations list (headline 5–10 facts), each a clickable https://agentii.ai/v/{ticker}/{citation_id}/{N} link, so the user can cmd+click straight to the exact SEC page. See contracts/citation-and-memory.md.

Error Handling

Failure Mode Action User-Facing Message
No price data Halt "Current stock price unavailable for {ticker}."
Negative FCF Flag — reverse DCF unreliable "Negative free cash flow — reverse DCF may produce nonsensical results."
Non-convergence Flag extreme assumptions required "Reverse DCF did not converge within 50 iterations — market may be pricing extreme scenarios."