Sensitivity analysis in stock valuation tests how changes in key input assumptions affect the output (intrinsic value). A sensitivity heatmap typically varies the discount rate (WACC) and growth rate simultaneously, revealing the range of plausible intrinsic values.
Running a DCF sensitivity analysis on a stock might show intrinsic value ranging from $45 (pessimistic: 11% WACC, 4% growth) to $95 (optimistic: 7% WACC, 12% growth). This range captures the model's uncertainty and is critical for responsible stock valuation.
No single set of assumptions is correct. Sensitivity analysis turns a point estimate into a probability-weighted range, making stock valuation more intellectually honest. It also reveals which inputs matter most — helping investors focus their research on the highest-leverage assumptions.
Sensitivity analysis is a core feature of MiniValuator. Every DCF stock valuation automatically generates a color-coded heatmap showing how intrinsic value changes across a grid of discount rate and growth rate combinations.
Ready to apply this concept? Try the MiniValuator DCF Calculator — calculate intrinsic value for any US stock in under 60 seconds.
