FP-DCF

Estimate intrinsic value with a first-principles DCF from structured JSON or provider-backed ticker input, and return auditable FCFF, WACC, and per-share value output.

Version: v0.6.0

Repository Workflow Notice

• For this repository, GitHub submissions do not use a separate branch workflow.
• Do not create a feature branch for routine updates; commit and publish on the designated branch directly unless the user explicitly asks for a different flow.
• If a default workflow suggests opening a branch or PR, treat that as incorrect for this repository.

Use this skill when the task is to estimate intrinsic value from structured fundamentals and assumption inputs using a disciplined, auditable DCF workflow.

Invocation Scope

Use this skill when the user asks for:

• intrinsic value
• DCF valuation
• FCFF / WACC based valuation
• market-implied growth
• what growth rate is implied by the current market price
• WACC / terminal-growth sensitivity
• auditable valuation JSON for a company

Do not use this skill as the only answer when the user asks:

• should I buy or sell this stock
• which stock is better
• build me a portfolio
• rank an industry
• backtest a strategy
• analyze a bank, insurer, broker, or financial-sector company

For investment-report tasks, FP-DCF may be used only as the valuation layer. The agent must still handle:

• industry structure
• competitive advantage
• business quality
• revenue / margin drivers
• balance-sheet risk
• management and capital allocation
• valuation conclusion

Model Selection Rule

• Use steady_state_single_stage when the company is mature, normalized, or the user wants a conservative base case.
• Use two_stage when there is a defensible explicit high-growth period followed by stable growth.
• Use three_stage when high growth is expected to fade gradually before terminal growth.
• Use market_implied_growth.enabled=true when the user asks what the current price implies.
• Use sensitivity output by default unless the environment lacks matplotlib or the user asks for JSON-only output.

Runtime Contract

This repository is executable when installed as a skill because it includes a concrete CLI entrypoint:

• Primary runner: {baseDir}/scripts/run_dcf.py
• Python module entrypoint: python3 -m fp_dcf.cli
• Sample input: {baseDir}/examples/sample_input.json
• Base Python dependencies for the default one-click path: akshare, baostock, numpy, pandas, yfinance, matplotlib

Preferred execution pattern:

1. Build a JSON payload that matches {baseDir}/examples/sample_input.json.
2. Write that payload to a temporary JSON file in the workspace.
3. Run one of:
   • python3 {baseDir}/scripts/run_dcf.py --input /path/to/input.json --pretty
   • python {baseDir}/scripts/run_dcf.py --input /path/to/input.json --pretty
4. Read the JSON output and present the result to the user.

If the runtime supports stdin piping, this also works:

bash

python3 {baseDir}/scripts/run_dcf.py --pretty < /path/to/input.json

Provider-backed normalization uses a local provider cache by default. To force a fresh pull for the current request, run:

bash

python3 {baseDir}/scripts/run_dcf.py --input /path/to/input.json --pretty --refresh-provider

If the runtime needs an isolated cache location, pass:

bash

python3 {baseDir}/scripts/run_dcf.py --input /path/to/input.json --pretty --cache-dir /path/to/cache

The main runner already returns a compact sensitivity summary and auto-renders both SVG and PNG chart artifacts by default. If the user explicitly asks for a WACC x Terminal Growth chart or sensitivity table, keep using the same main runner so the valuation JSON and artifact paths come back in a single output:

bash

python3 {baseDir}/scripts/run_dcf.py \
  --input /path/to/input.json \
  --output /path/to/output.json \
  --pretty

That one command will default the chart artifact paths to /path/to/output.sensitivity.svg and /path/to/output.sensitivity.png.

Input Shape

The expected JSON object contains:

• ticker
• market
• valuation_model
• assumptions
• fundamentals

Minimum required values for a useful result:

• assumptions.effective_tax_rate
• assumptions.marginal_tax_rate
• assumptions.risk_free_rate
• assumptions.equity_risk_premium
• assumptions.beta
• assumptions.pre_tax_cost_of_debt
• fundamentals.fcff_anchor or fundamentals.ebit

Supported valuation_model values in v0.6.0:

• steady_state_single_stage
• two_stage
• three_stage

For two_stage, the engine continues to support the legacy assumptions.high_growth_rate / high_growth_years fields and also accepts assumptions.stage1_growth_rate / stage1_years as compatible aliases.

For three_stage, the valuation path requires these assumption fields:

• assumptions.terminal_growth_rate
• assumptions.stage1_growth_rate
• assumptions.stage1_years
• assumptions.stage2_end_growth_rate
• assumptions.stage2_years

For three_stage, this optional field is also supported:

• assumptions.stage2_decay_mode with default linear

market_implied_growth is the only formal market-implied block. Its meaning depends on valuation_model: steady_state_single_stage solves market-implied long-term growth, while two_stage and three_stage solve market-implied stage-1 growth.

If fundamentals.fcff_anchor is not supplied, the runner computes it from:

• ebit
• da
• capex
• delta_nwc or a fallback working-capital field

If those structured fields are mostly missing, the runner can auto-normalize them from a live provider when:

• provider is set to yahoo, or
• provider is set to akshare_baostock for market=CN, or
• the payload has a ticker but is missing core DCF inputs

The minimal provider-backed input shape is:

json

{
  "ticker": "AAPL",
  "market": "US",
  "provider": "yahoo",
  "statement_frequency": "A",
  "valuation_model": "steady_state_single_stage",
  "assumptions": {
    "terminal_growth_rate": 0.03
  }
}

For China A-shares, this explicit provider shape is also supported:

json

{
  "ticker": "600519.SH",
  "market": "CN",
  "provider": "akshare_baostock",
  "statement_frequency": "A",
  "valuation_model": "steady_state_single_stage",
  "assumptions": {
    "terminal_growth_rate": 0.025
  }
}

When market="CN" and Yahoo normalization fails, FP-DCF automatically falls back to akshare_baostock. In that path, AkShare provides statement data and BaoStock provides price history and the latest close.

The payload can also drive normalization behavior through an optional normalization object:

• normalization.provider
• normalization.use_cache
• normalization.refresh
• normalization.cache_dir
• normalization.max_cache_age_hours

The payload can also request sensitivity analysis through an optional sensitivity object:

• sensitivity.enabled
• sensitivity.metric
• sensitivity.detail
• sensitivity.chart_path
• sensitivity.wacc_range_bps
• sensitivity.wacc_step_bps
• sensitivity.growth_range_bps
• sensitivity.growth_step_bps

The payload can also request market-implied growth through an optional market_implied_growth object:

• market_implied_growth.enabled
• market_implied_growth.lower_bound
• market_implied_growth.upper_bound
• market_implied_growth.solver
• market_implied_growth.tolerance
• market_implied_growth.max_iterations

market_implied_growth always solves one field based on valuation_model:

• steady_state_single_stage -> growth_rate
• two_stage -> stage1_growth_rate
• three_stage -> stage1_growth_rate

Sensitivity output is enabled by default. To disable it for a specific run:

• pass --no-sensitivity, or
• set sensitivity.enabled=false

Live provider-backed runs are inherently date-sensitive. Do not hard-code expected valuation numbers when validating this path; validate the presence and plausibility of the returned fields instead.

Provider-backed runs return data_freshness:

• fresh: provider cache age is within the allowed window
• stale: provider cache age exceeds the allowed window; treat the valuation as degraded
• unknown: cache creation time is missing or unreadable; treat the valuation as degraded
• missing: provider data is structurally missing; treat the valuation as degraded or fail if a required field is unavailable
• user_supplied: manual structured input; do not force a freshness judgment

Default freshness windows are 24 hours for price-sensitive provider snapshots and 168 hours for statement-only snapshots. Use --refresh-provider, normalization.refresh=true, or a stricter normalization.max_cache_age_hours when the user asks for current market data.

Core Rules

Tax Policy

• Keep the operating tax estimate for FCFF separate from the marginal tax assumption used in WACC.
• If the statement-level tax rate is available, prefer it for EBIAT/NOPAT.
• If the marginal tax rate is manual or market-defaulted, expose that source in the output.
• Do not silently reuse one tax rate for both paths when the intended sources differ. If a fallback reuse happens, surface it in warnings.

Working-Capital Policy

Use this fallback order and report which path was used:

1. delta_nwc
2. op_nwc_delta
3. nwc_delta
4. cash-flow working-capital change fields such as change_in_working_capital

If all paths fail, flag the result as degraded rather than pretending the estimate is fully reliable.

FCFF Policy

• Prefer a normalized steady-state FCFF anchor for single-stage valuation.
• Prefer NOPAT + ROIC + reinvestment when the driver data is usable.
• Fall back to normalized historical FCFF only when the operating-driver path is incomplete.
• Do not discount historical realized FCFF as if it were a forward forecast.

WACC Policy

• Use explicit sources for risk-free rate, ERP, beta, pre-tax debt cost, and capital weights.
• Prefer explicit capital weights from the input payload when available.
• Apply the marginal tax assumption only to the debt tax shield.
• Attach a warning when key inputs are manual, defaulted, stale, or missing.

Sector Policy

• Financial institutions often produce unreliable FCFF under industrial-company DCF logic.
• When the company is bank-like, insurer-like, broker-like, or otherwise balance-sheet-driven, downgrade or exclude the result unless the workflow explicitly supports that sector.

Output Requirements

Always return:

• valuation model used
• contract_version
• requested_valuation_model
• effective_valuation_model
• degraded
• major assumptions with source labels
• FCFF anchor and anchor method
• working-capital source used
• WACC inputs and capital weights
• enterprise value, equity value, and per-share value when available
• valuation.present_value_stage1
• valuation.present_value_stage2
• valuation.present_value_terminal
• valuation.terminal_value
• valuation.terminal_value_share
• valuation.explicit_forecast_years
• market_implied_growth when that block is enabled and valid
• data_freshness with provider, snapshot_as_of, cache_created_at, cache_age_hours, freshness_class, and requires_refresh
• provider cache status diagnostics when provider-backed normalization is used
• diagnostics, warnings, and degradation flags
• by default, return a compact sensitivity summary plus both chart file paths

Canonical JSON Schema contracts live in:

• contracts/valuation_input.schema.json
• contracts/valuation_output.schema.json
• contracts/data_freshness.schema.json
• contracts/market_implied_growth.schema.json
• contracts/sensitivity_summary.schema.json

Treat contracts/ as machine contracts, not as loose documentation.

contract_version exists so downstream agents and pipelines can make explicit compatibility decisions.

Schema-valid does not guarantee business-semantic equivalence. Differences in assumptions, defaults, freshness, and degraded execution paths can still materially change how the output should be interpreted.

Execution Notes

• Use {baseDir} instead of guessing the install path.
• Prefer writing a JSON file and passing --input over hand-building one-line shell JSON.
• If the payload only contains ticker/market plus light assumptions, rely on provider-backed normalization instead of fabricating fundamentals.
• Use the default provider cache for repeated runs on the same ticker unless the user explicitly asks for fresh data.
• If the user asks for the latest market or statement snapshot, add --refresh-provider or set normalization.refresh=true.
• If data_freshness.freshness_class is stale, unknown, or missing, surface the warning and avoid presenting the valuation as current.
• If data_freshness.requires_refresh=true and the user asked for current market conditions, rerun with --refresh-provider.
• If the user asks for a valuation sensitivity table or heatmap, prefer the main runner with its default sensitivity output and auto-generated chart path over a separate second command.
• If the caller needs the full numeric heatmap grid in JSON, set sensitivity.detail=true instead of bloating the default output for every run.
• Only use --sensitivity-chart-output or sensitivity.chart_path when the caller explicitly wants to override the default artifact location.
• The default one-click path assumes matplotlib is installed, because PNG/SVG chart artifacts are rendered automatically.
• If the environment intentionally excludes matplotlib, disable sensitivity first with --no-sensitivity or sensitivity.enabled=false before running the main CLI.
• If per_share_value sensitivity is unavailable because shares_out is missing, try --refresh-provider first or switch the sensitivity metric to equity_value.
• If the user only gives high-level valuation preferences, ask for or derive the missing structured inputs before running the script.
• If valuation_model=three_stage is missing stage1_growth_rate, stage1_years, stage2_end_growth_rate, stage2_years, or terminal_growth_rate, fail with a clear error instead of falling back.
• If valuation_model is unknown, fail with an error containing unsupported valuation_model; do not silently remap it to another model.
• Do not silently degrade a requested three_stage valuation into two_stage or steady_state_single_stage.
• Keep the market-implied growth contract stable in v0.6.0: market_implied_growth remains the only formal market-implied block.
• Keep market_implied_growth as the only formal market-implied block and derive the solved field from valuation_model.
• Reject legacy market-implied inputs with explicit errors.
• If the user wants single-stage market-implied growth, route that request through payload.market_implied_growth.enabled=true and let valuation_model=steady_state_single_stage determine the solved field.
• Read references/methodology.md only when you need policy detail beyond this file.

Reference Map

Read only what you need:

• references/methodology.md for the valuation methodology
• examples/sample_input.json for the intended input contract
• examples/sample_output.json for the intended output contract
• examples/sample_input_market_implied_growth_single_stage.json for a minimal single-stage market-implied growth example
• examples/sample_input_market_implied_growth_two_stage.json for a minimal two-stage market-implied growth example
• examples/sample_input_market_implied_growth_three_stage.json for a minimal three-stage market-implied growth example
• examples/300347.sz_market_implied_growth_single_stage.json and examples/300347.sz_market_implied_growth_single_stage.output.json for a real 300347.SZ single-stage market-implied demo
• examples/300347.sz_market_implied_growth_two_stage.json and examples/300347.sz_market_implied_growth_two_stage.output.json for a real 300347.SZ two-stage market-implied demo
• examples/300347.sz_market_implied_growth_three_stage.json and examples/300347.sz_market_implied_growth_three_stage.output.json for a real 300347.SZ three-stage market-implied demo
• examples/cn_moutai_single_stage.json for a CN provider-backed single-stage example
• contracts/valuation_input.schema.json and contracts/valuation_output.schema.json for the canonical JSON contracts

Quality Bar

• Prefer explicit assumptions over hidden heuristics.
• Prefer auditable fallbacks over brittle elegance.
• Label degraded results clearly.
• Be conservative when provider data is incomplete or inconsistent.
• If a result depends heavily on terminal value, include that in the diagnostics.