Estimated Value goes down with next years revenues increase

[mne70let]

Hello! Thanks a lot for your work - really handy tool for DCF analysis.
I am not a valuation expert but the fact that estimated stock value goes down if you change next year revenue growth or 2-5 year CAGR puzzles me (tested with several tickers). Is this a correct DCF model response?
Thanks in advance!

[codepatel]

Hi...you can check in the DCF table (2-stage Terminal value after 10 years) at the bottom of the Summary Value and Price, whether the actual Free Cash Flow (FCF) increased with the higher revenue growth. I can also check the same if you provide the tickers you are looking to test with. Also, this DCF calculation is not suitable for financial companies like banks, REITs, insurance companies, etc.

If the revenue is growing for a non-financial business, and the profits are not or the business requires increasing capital for every growth $ received as per your estimated Sales to capital ratio, then the sum of DCF would be lower with higher revenue growth. This means the business is not generating enough profits on higher sales or not using the capital efficiently to do high quality sales increase. Hope that makes sense, and if there are still errors with the calculation (use this spreadsheet from Professor Damodaran as a reference for comparison: http://www.stern.nyu.edu/~adamodar/pc/fcffsimpleginzuCorona.xlsx), I will be glad to fix it.

Thanks,
Hardik