Reverse DCF
What growth rate is priced into Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR (SBS)?
At the current market price of $5.43, a reverse DCF implies Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR (SBS) must grow revenue about 9.0% per year for the next decade (7.3% in year one) to be worth what it trades for — holding margins, taxes, reinvestment, and the discount rate fixed at the model's baseline assumptions.
Market price
$5.43
Implied growth (yr 1)
7.3%
Implied 10-yr CAGR
9.0%
Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR (SBS) reverse DCF FAQ
What revenue growth rate is priced into Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR (SBS)?
At the current market price of $5.43, a reverse DCF implies Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR's revenue must grow about 9.0% per year for the next ten years (starting at 7.3% in year one) to justify the price — holding margins, taxes, reinvestment, and the discount rate at the model's baseline assumptions.
What is a reverse DCF?
A regular DCF turns growth assumptions into a fair value. A reverse DCF inverts that: it holds every other assumption fixed and solves for the single revenue-growth path that makes intrinsic value equal the current market price. The result is the growth the market is already paying for — a hurdle you can judge the business against.
How does the implied growth compare with the model's own SBS forecast?
The forward DCF for Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR estimates a fair value of $1.97 per share, implying SBS is overvalued at the $5.43 market price. If the market-implied growth is well above what the forward model assumes, the price embeds more optimism than the fundamentals-anchored forecast — and vice versa.
How this SBS implied growth is solved
The engine takes the same 10-year DCF used for the Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR fair-value estimate — margins converging to Damodaran industry benchmarks, year-by-year WACC, a reinvestment rate tied to sales-to-capital efficiency — and inverts it: instead of projecting growth to get a value, it bisects on the starting revenue-growth rate, re-running the valuation until intrinsic value matches the market price. The implied path follows the same moat-scored convergence toward the 2% terminal growth rate that the forward model uses.
The interactive version lets you change what is held fixed — margins, convergence timing, industry benchmarks — and overlays the market-implied growth path on your own editable forecast, so you can see exactly where your expectations and the market's diverge.
The implied growth re-solves when Companhia de Saneamento Basico do Estado de Sao Paulo SABESP ADR files a new quarterly or annual report. For educational/informational purposes only — not investment advice. Last solved 2026-07-19.