What is the purpose of back-calculating implied share price in a DCF model?

Back-calculating the implied share price in a DCF model serves to provide a clear figure for potential investors, as it translates the overall valuation derived from the discounted cash flows into a per-share value actionable in the stock market. This approach allows investors to gauge if a company's stock is overvalued or undervalued compared to its market price, facilitating informed investment decisions. By deriving an implied share price, investors can compare this valuation against the current market price to assess whether the investment represents a good opportunity based on the projected future cash flows of the company. This process is essential in helping investors determine their potential return on investment and understanding if the business is worth investing in at its current price.