Vulcan Stock Research

Mastering Total Return Forecasting with FAST Graphs®

Comprehensive Step-by-Step Guide Including All Forecasting Calculators | Published on Vulcan-Stock.com

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Why This Guide Exists

If you’re a serious long-term investor, FAST Graphs® is an invaluable tool. This guide will take you beyond simple visualizations, transforming FAST Graphs into a precise forecasting engine. We’ll explain exactly how to use all five forecasting calculators—Estimates, Normal Multiple, LT Growth, Historical CAGR, and Custom—to produce accurate, scenario-weighted total return forecasts.

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Step-by-Step Guide to Forecasting Total Returns Using FAST Graphs®

Step 1: Access the Stock’s Historical Graph

• Go to: https://www.fastgraphs.com
• Enter your chosen ticker symbol (e.g., MSFT, AAPL, HD).
• You’ll land on the Historical Graph page by default.
• Confirm the display is set to the 10-year default timeframe.

What to note:

• Black line: Stock Price
• Orange line: Fair Value (Intrinsic P/E)
• Blue line: Historical Normal P/E

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Step 2: Identify the Blended P/E Ratio

• Located immediately below the chart, find the Blended P/E.
  • This is your primary entry valuation metric.
  • It combines trailing actual EPS and the nearest future estimate EPS from FactSet.

Compare Blended P/E with:

• Fair Value P/E (orange)
• Historical Normal P/E (blue)

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Step 3: Navigate to the Forecasting Calculators Tab

• Select the Forecasting Calculators tab located below the chart.
• By default, you’ll see the “Estimates” calculator.

FAST Graphs offers five distinct forecasting methods:

• Estimates
• Normal Multiple
• LT Growth
• Historical CAGR
• Custom

Here’s how to effectively use each:

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Calculator 1: Estimates Calculator

• Uses analyst consensus EPS estimates from FactSet.
• Ideal for companies with stable and predictable earnings and reliable analyst coverage.
• Record Total Annual ROR based on the Orange Fair Value line (intrinsic valuation).

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Calculator 2: Normal Multiple Calculator

• Uses the stock’s historical market valuation average (5-year, 10-year, etc.).
• Ideal for assessing a “market-based” scenario or bull-case scenario.
• Select timeframe (default to 5-year normal).
• Record Total Annual ROR for comparison.

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Calculator 3: LT Growth Calculator

• Uses projected long-term growth rates based on historical trends.
• Best suited for stable growth companies with consistent historical growth patterns.
• Adjust the assumed growth rate as necessary for conservatism or optimism.
• Record the projected Total Annual ROR.

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Calculator 4: Historical CAGR Calculator

• Forecasts returns based purely on historical compound annual growth rates.
• Useful for cyclical companies or when analyst estimates are unreliable.
• Choose appropriate historical timeframe (5-year, 10-year, etc.).
• Record Total Annual ROR.

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Calculator 5: Custom Calculator

• Allows complete manual input of EPS growth rates and exit multiples.
• Ideal for modeling bear-case scenarios or highly customized forecasts.
• Enter a conservative or discounted multiple manually.
• Record Total Annual ROR.

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Step 4: Factor in Dividend Contributions

• Toggle the dividends option below each calculator to view dividend impacts.
• Consider exporting to Excel for dividend reinvestment scenarios or detailed modeling.

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Step 5: Scenario Probability Weighting

Now, apply probability-weighted scenarios:

• Example weights could be:
  • Estimates (base-case): 40%
  • Normal Multiple (bull-case): 30%
  • LT Growth or Historical CAGR (historical scenario): 20%
  • Custom (bear-case): 10%

Calculate expected CAGR:
Expected CAGR = (0.40 × Estimates ROR) + (0.30 × Normal ROR) + (0.20 × LT Growth/Historical ROR) + (0.10 × Custom ROR)

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Interpreting Valuation Signals Clearly

Valuation Signal	What it Indicates
Blended P/E < Fair Value P/E	Undervalued; potential buying opportunity
Blended P/E = 0.8–0.9 × Normal P/E	Moderately undervalued compared to historical averages
Blended P/E > 1.2 × Normal P/E	Possibly overvalued; caution advised

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Best Practices for Accurate Forecasts

• Always use Blended P/E for your starting valuation.
• Run forecasts across all five calculators to cover a comprehensive range of scenarios.
• Update your forecasts quarterly to incorporate new analyst estimates and recent earnings reports.
• Document scenario assumptions clearly for future reference.

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Quick Workflow Summary

1. Select your stock ticker and view Historical Graph.
2. Record Blended P/E and compare it to intrinsic and market valuations.
3. Access the Forecasting Calculators tab.
4. Run each of the five calculators (Estimates, Normal Multiple, LT Growth, Historical CAGR, Custom).
5. Document Total Annual ROR from each method.
6. Factor in dividend contributions.
7. Apply scenario probability weighting to derive expected CAGR.
8. Compare your expected CAGR to your investment hurdle rate to make informed decisions.

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Conclusion

By systematically utilizing each forecasting calculator in FAST Graphs, you transform intuitive visual insights into mathematically robust and defendable total return forecasts. Embracing a scenario-based, weighted-probability approach provides unparalleled discipline and clarity.

Harness the full power of FAST Graphs. Forecast like a professional. Invest with confidence.

That’s the Vulcan-Stock.com way.