moody's — what the price is actually assuming

I don’t start most valuations by forecasting growth. I start by asking the market what growth it’s assuming, and then deciding whether that number is sane.

At around $490, a reverse DCF on Moody’s implies roughly 11% free-cash-flow growth for a decade, discounted at my flat 10%. That’s not impossible for a business this good — but it leaves no margin of safety, and it assumes near-flawless execution.

The attached sheet lets you change the inputs and watch the implied growth move. My take is in the last letter; the math is here so you can disagree with me properly.