Revenue growth rate is the percentage increase in a company's total revenue over a given period. In stock valuation, it is a primary driver of free cash flow projections and terminal value assumptions in DCF models.
If a company grew revenue from $800M to $960M in one year, the growth rate is 20%. In stock valuation, analysts commonly use a blend of historical rates, analyst consensus, and top-down industry forecasts to project future revenue growth.
Revenue growth rate is the single most impactful assumption in most DCF stock valuations. A 2% change in the projected growth rate can move the intrinsic value estimate by 20–40%. Using overly optimistic growth assumptions is the most common cause of inflated stock valuation.
MiniValuator allows users to input a high-growth rate for the initial forecast phase and a lower stable rate for the terminal period. The sensitivity heatmap shows how stock valuation changes across a range of growth assumptions.
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