Minerva Investment Management Society

Quantitative Research Paper

A Data-Driven DCF Valuation Framework

· Quantitative Research

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Summary

The Quantitative Research Division of the Minerva Investment Management Society is pleased to share its latest article: “A Data-Driven DCF Valuation Framework”

Inspired by the simulation-based valuation framework introduced by, Corrado Botta Researcher at Bocconi University, this article explores how the Simulated Method of Moments (SMM) can be integrated into a Discounted Cash Flow (DCF) framework to estimate growth dynamics in a more rigorous and data-driven manner.

Rather than relying on analyst-selected growth assumptions, the methodology calibrates a stochastic growth process to historical firm data and incorporates the resulting estimates into a DCF valuation model.

The paper covers the theoretical foundations of DCF valuation, the estimation of AR(1) growth dynamics through Monte Carlo simulation and an empirical application to Microsoft Corporation.

One of the main takeaway: simulation-based estimation can provide objectively grounded growth projections and a probabilistic assessment of intrinsic value, reducing reliance on arbitrary assumptions, while preserving the intuition underlying fundamental valuation.

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Details

Published
18 June 2026
Division
Quantitative Research
Type
Quantitative Research Paper
Pages
10
Authors
2

Cite this report

Minerva Investment Management Society (2026). A Data-Driven DCF Valuation Framework. Quantitative Research. https://minervaims.org/archive/a-data-driven-dcf-valuation-framework-2026

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