Reverse DCF is a method to determine implied growth rate or future cash flows from a company's stock price. It involves working backwards from the market price to estimate the assumptions behind it. By applying this analysis, investors can assess if the stock is overvalued or undervalued based on their own analysis.
In short: Reverse DCF is used to understand market expectations about your interested Stock!
More info here:
Investopedia
You will need two key inputs for getting the growth rates market is expecting from your favorite company.
- marketcap or stock price of the stock: e.g for AAPL 177 is stock Price as 11 Aug, 2023
- sustained cash flow or free cash flow of the stock OR per share fcf/eps for the stock, e.g: EPS of AAPL is 6.11 in FY 2022
Note:
- Ideally the value should be: operating cashflows - maintenance capex + capitalized r&d - (dilution due to sbc)