Alpha Spread forecasts a company's future cash flow and estimates the appropriate discount rate to calculate the DCF value of a stock.
You can view the operating model used to estimate free cash flow in the "DCF Operating Model" block. You can change model inputs forecasted by our algorithm (such as revenue growth, margins, etc.) if you are a professional analyst and have your own opinion about them.
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Once free cash flow is forecasted, it is discounted at a risk-appropriate discount rate (which you can also change in the DCF settings). The resulting value is the present value of the company's free cash flow.
Depending on which type of operating model for the company our algorithm has chosen (equity or whole firm valuation model), the resulting value is either the value of equity or the value of the entire firm. In the case of the latter, to move from the value of the firm to the value of equity, liabilities are subtracted and assets are added. You can see these and subsequent steps in the block "Capital structure".
In order to come from the value of equity to the DCF value of one share, we only need divide the equity value by the number of shares outstanding.