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r/wallstreetbetsSee Post

COSTCO Stock Analysis: 571$ Fair Value - DCF, Graham, Fear & Greed, DuPont

r/StockMarketSee Post

COSTCO Stock Analysis: 571$ Fair Value - DCF, Graham, Fear & Greed, DuPont

r/stocksSee Post

COSTCO Stock Analysis: 571$ Fair Value - DCF, Graham, Fear & Greed, DuPont

r/wallstreetbetsSee Post

DCF Ford (F) 68 % up

r/stocksSee Post

Do (big) tech stocks mainly trade below their intrinsic value?

r/investingSee Post

REITs - how to evaluate them?

r/stocksSee Post

Starbucks(SBUX) DCF Analysis

r/stocksSee Post

REITs - how to evaluate them?

r/stocksSee Post

Writing an Investment Recommendation

r/StockMarketSee Post

Unity Software Analysis_1

r/stocksSee Post

What’s the most accurate way to measure DCF

r/StockMarketSee Post

A tool to understand fair value estimates based on past CAGR rates and 10+ years of financial data.

r/StockMarketSee Post

Can anyone help me explain NVDA?

r/stocksSee Post

HIMS is undervalued and has a lot of potential

r/stocksSee Post

Ubisoft(UBI) DCF Analysis

r/stocksSee Post

Live Nation Entertainment (LYV) DCF Analysis

r/stocksSee Post

Take-Two Interactive(TTWO) DCF Analysis: GTA VI

r/stocksSee Post

Anyone Done a DCF on $PARA?

r/stocksSee Post

SNPS price drop -> soon fairly valued?

r/stocksSee Post

UNH - what's your take and your price tag?

r/stocksSee Post

Electronic Arts (EA) DCF Analysis

r/stocksSee Post

Question about valuation

r/stocksSee Post

I just did my first DCF

r/WallstreetbetsnewSee Post

$MIRA trading at $3.80 - valuation of $22.70 based on DCF analysis

r/pennystocksSee Post

$MIRA trading at $3.80 - valuation of $22.70 based on DCF analysis

r/stocksSee Post

Polo Ralph Lauren(RL) DCF Analysis

r/stocksSee Post

Seeking Guidance on NPV Calculation in My First DCF Analysis - Are Negative Free Cash Flows a Red Flag?

r/stocksSee Post

Stock Valuation GPT

r/investingSee Post

What are the combination of principles, models or frameworks you have found to be influential in shaping your understanding valuation and investing?

r/wallstreetbetsSee Post

Samsung is underpriced ? (005930 on the korean markets , SSNLF in the states)

r/investingSee Post

Valuing a low-rate mortgage

r/wallstreetbetsSee Post

AMR Bull Case

r/investingSee Post

Why is debt part of value?

r/stocksSee Post

Domino's Pizza $DPZ - Down 40%, and still expensive

r/pennystocksSee Post

$GSMG is the next big thing in Penny Stocks

r/stocksSee Post

Apple(AAPL) DCF Analysis

r/investingSee Post

Inmode - Medical devices - break my thesis

r/stocksSee Post

Stock Pitch and DCF Model for Lockheed Martin Corp

r/stocksSee Post

Crocs Stock Analysis (CROX)

r/stocksSee Post

Simplywall.st valuations

r/wallstreetbetsSee Post

JOBY - shoot for the moon, crash on the ground (valuation)

r/stocksSee Post

McDonald (MCD) DCF Analysis

r/wallstreetbetsSee Post

QQQ need to drop more

r/wallstreetbetsSee Post

Get the defibrillator for this BODY

r/optionsSee Post

DCF Model in Python with Monte Carlo Simulation

r/wallstreetbetsSee Post

DCF Model in Python with Monte Carlo Simulation

r/wallstreetbetsSee Post

DCF Model in Python with Monte Carlo Simulation

r/stocksSee Post

Fast Retailing DCF Analysis: Uniqlo

r/StockMarketSee Post

Help needed with MCD valuation

r/stocksSee Post

Spotify (SPOT) DCF Analysis

r/stocksSee Post

ADBE fair value and entry points for long term

r/stocksSee Post

Time Frame for DCF Valuation

r/wallstreetbetsSee Post

SWBI 👀👀

r/StockMarketSee Post

Is this a good format for a 1 page stock pitch?

r/stocksSee Post

Is this a good format for a 1 page stock pitch?

r/stocksSee Post

MercadoLibre seems absurdly undervalued.

r/investingSee Post

Value driver formula in practice

r/StockMarketSee Post

Do Investors Use DCF Models for Valuing Companies? DIY or Rely on Analysts?

r/StockMarketSee Post

Any app for DCF calculations

r/investingSee Post

HAPBEE TECHNOLOGIES A Revolutionary Technology in the Wellness Industry, in depth research

r/smallstreetbetsSee Post

HAPBEE TECHNOLOGIES A Revolutionary Technology in the Wellness Industry, in depth research

r/pennystocksSee Post

HAPBEE TECHNOLOGIES A Revolutionary Technology in the Wellness Industry, in depth research

r/WallstreetbetsnewSee Post

HAPBEE TECHNOLOGIES A Revolutionary Technology in the Wellness Industry, in depth research

r/stocksSee Post

Match Group (MTCH) DCF Analysis: Tinder, Hinge and OkCupid DCF.

r/stocksSee Post

JPMorgan Chase Analysis and Financial Statements

r/investingSee Post

computing DCF, double counting ?

r/wallstreetbetsSee Post

How u/deepfuckingvalue crushed the markets

r/WallStreetbetsELITESee Post

The DFV Method(update)

r/stocksSee Post

Duolingo (DUOL) DCF Analysis

r/stocksSee Post

Hai Di Lao (HKG:6862) DCF Analysis: China's Best Hotpot Chain.

r/stocksSee Post

ASML - Fair value based on DCF

r/stocksSee Post

How does enterprise value make sense and how does it compare to a discounted cash flow?

r/StockMarketSee Post

Q2 LUMN Earnings Report 2023

r/investingSee Post

LUMN Q2 2023 Earnings Report

r/investingSee Post

Are equities actually overvalued? Or is it something else…

r/stocksSee Post

Grab(GRAB) DCF Analysis: Southeast Asia's Uber

r/weedstocksSee Post

Weedmaps Stock Analysis

r/stocksSee Post

Grab (GRAB) DCF Analysis: Southeast Asia's Uber

r/stocksSee Post

Is FCF per Share a Vastly overlooked metric or am I missing something?

r/stocksSee Post

How to still be an active stock picker if I have less free time?

r/wallstreetbetsSee Post

$SYNA Synaptics an edge-AI play. Hardware AI Company before its time?

r/investingSee Post

Using news items in your valuation model?

r/wallstreetbetsSee Post

$381 NVDA Price Target: I Am Shorting.

r/investingSee Post

Why does DCF use (1/1+r) rather than (1-r)?

r/wallstreetbetsSee Post

CVS Health is too cheap to ignore

r/wallstreetbetsSee Post

CVS Health is too cheap to ignore

r/WallstreetbetsnewSee Post

$CSX: Railroad provider with an East Coast Moat with the potential to profit big on US reshoring

r/stocksSee Post

Medpace (MEDP), a solid and growing company

r/wallstreetbetsSee Post

Palantir's Intrinsic Value Indicates a Potential 49% Discount - 💎🤲 in the Rough?

r/stocksSee Post

Beyond Meat (BYND) DCF Analysis

r/stocksSee Post

MRNA Strong-Buy, wondering where I'm going wrong with this.

r/stocksSee Post

Google(GOOG) DCF: AI

r/investingSee Post

Calculating Intrinsic Value Help?

r/StockMarketSee Post

Palo Alto Networks Analysis made by CFA analyst. You can access his DCF in the description of the YT video.

r/investingSee Post

What are your thoughts on Qualcomm?

r/ShortsqueezeSee Post

Tupperware brands corp might be a buy, or not

r/stocksSee Post

ACI severely undervalued or inaccurate DCF?

r/wallstreetbetsSee Post

INTC vs AMD: Benchmark, Price Target Range, Deep analysis & Fundamentals

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Intel Stock Evaluation + AMD Benchmark: Price Target Rage, deep analysis

r/StockMarketSee Post

Intel Stock Evaluation + AMD Benchmark: Price Target Rage, deep analysis

Mentions

I don't think auditors speculate as to the impact of uncertain catalysts. I assume G&I value is tested on a regular basis by either the income approach (DCF) or market comps. Neither will speculate as to the value of a brand, for example, if a federally illegal drug is rescheduled and then regulated in a tbd fashion. I get what you're saying, but when it comes to Tilray I struggle to see how $2.95B in intangibles can be justified, let alone grow in value.

Mentions:#DCF

What DCF model did you/they use to get to an intrinsic value of 2.15/share?

Mentions:#DCF

dismissing the company's potential based solely on valuation metrics overlooks important things. NVDA operates in an evolving industry where traditional valuation methods does not fully capture future growth. The demand for their services continues to rise. Their recent performance indicates strong momentum. focusing solely on P/E ratios and DCF models neglects aspects of NVDA's business, such as technological innovation . While past growth rates may not be sustainable indefinitely, NVDA's record of adapting to market trends and expanding its product offerings serves its long-term purpose. Just look at Tesla, Amazon, META

Mentions:#NVDA#DCF

Dear god no. It was bid up to insanity. Beyond priced to perfection. “If” you look at it fundamentally, DCF, P/E etc etc. they would need to grow at no less than 20% per year for 15 years straight for the current price to justify the “future” profits… at a P/E of 70… fine if they grow at 70 percent. I am aware they’ve recently done more than that this year (No company can grow at that rate year over year over year) they all slow down… and I don’t see a long line of people handing them 10 million dollars per order per year… if I had some NVDA I’d be looking to do some selling for profit taking… if you don’t follow fundamental analysis then I’m sure most of this is falling on deaf ears. Do whatever you want. I hope it works out for you. Buy high to sell higher is not something I do. Chase that hot hand I hope they grow up to be a $94 trillion dollar company. Hope it works out for you.. history doesn’t exactly repeat, but it rhymes .

Mentions:#DCF#NVDA

My suggestion is to not rely on such a website. Let me explain why: - If the price targets are based on analysts, then the issue is those are lagging indicators. They move them up when the price goes up, and move them down when the price falls. Moreover, they tend to act in unison. Now I'm not totally against analyst price targets--but I'm more interested in their estimates of earnings and averaged across multiple analysts. (Which is how we compute forward P/E multiples) That's at least more 'objective' hopefully, while for the actual price target who knows what multiple they are using (EV/EBITDA, EV/FCF, P/FCF, P/EBIT, P/E, P/(2025 E), ...) - If they aren't based on analyst price targets, it means most likely the website is plugging in the company's financials into a generic discounted cash flow model. And these are usually awful. Why? They make questionable assumptions like 'Assume the past few years of revenue growth are exactly like the next few' or 'assume revenue growth reverts to this number we picked'. Now those may be fine assumptions, but when you are writing generic code to handle hundreds/thousands of companies, you end up with terrible models that fail to account for industry trends, regulatory/legal issues, management quality, accounting oddities, etc. An easy tell is when they tell you a company is 150% undervalued and it turns out to be because it's a highly cyclical, leveraged steel company with a suppressed P/E ratio that it deserves but the DCF model uses the same procedure as it does for modelling Apple (which it states is 50% overvalued). Instead, you should do your own research, borrowing analyst estimates of revenue/earnings as a tool but not as gospel, and for sure not relying on some price target pulled out of thin air. Build you own DCF models or if that's too complicated, figure out reasonable multiples to apply given the growth and where its peers trade out. If you are unwilling to do that work, then I think investing in individual stocks is a poor idea.

Mentions:#FCF#DCF

BERNSTEIN: TSLA stock “remains high on almost every valuation metric compared to both traditional and higher-growth auto OEMs .. Our DCF now points to fair value of $93 (down from $120), primarily due to lowered estimates .. but also due to a push-out in EV adoption growth.”

Mentions:#TSLA#DCF

Bolinger Bands are math. It's a moving average and standard deviation 😅 The problem is you don't even know what you don't know and you don't care to do the research or basic googling things up before commenting. You just trash talk someone with good intentions and sound ignorant. You confuse TA with chart patterns and call everything you dont understand and dont look up as "astrology." I honestly could have talked about DCF, residual income models, ARIMA, or HMMs and you'd still think that was astrology. Talk about intellectual dishonesty...

Mentions:#DCF

Ok big shot, lol. Gatekeeping? I'm gatekeeping by sending you information? Oh, and information you should already know since you're so familiar with the finance industry lol. Gatekeeping, really? That is some serious gen z crybaby stuff. Cry me a river. If you're such an expert why didn't you know how interest rates affect DCF in financial models? Why don't you just google this information? Sure, you're just posting a question or idea. But your question is essentially saying "Hey I think the entire stock market is wrong, and I'm right." [https://www.nasdaq.com/articles/how-do-rising-interest-rates-affect-the-stock-market](https://www.nasdaq.com/articles/how-do-rising-interest-rates-affect-the-stock-market) *Rising rates affect equities in three primary ways.*  *First and foremost, higher debt costs squeeze corporate profits. "Firms with a lot of debt are impacted by potential higher interest expense," says Bruce Liegel, former fund manager at Millennium and author of* [*Global Macro Playbook*](https://www.hedder.com/series/global-macro-playbook)*, a monthly research series. “Small cap companies also underperform large cap companies, as they are typically more vulnerable to higher borrowing costs.” Consequently, such falling corporate profits will drag on stock prices.*  ***Moreover, rising rates dim the economic growth prospects and can impact future returns for companies.***  ***Secondly, rising rates decrease the present value of any business.***  ***As already outlined, interest rates are the discount rate on future cash flows. So, a higher discount rate lowers the present value of future earnings for stocks.***  *When this occurs, stock prices tend to face downward pressure. To quote the Oracle of Omaha again, “the most important item over time in valuation is obviously interest rates. If interest rates are nothing, values can be almost infinite. If interest rates are extremely high, that's a huge gravitational pull on values”.*

Mentions:#DCF

My DCF fair price is $171 so far.

Mentions:#DCF

GOOGL is still a great stock to go in. Forward P/E 19.99 vs 5-Yr AVG 26.19 PEG 1.18 vs 5-Yr AVG 1.32 DCF Fair price: $171 [https://stockone.page/stock/GOOGL](https://stockone.page/stock/GOOGL)

Try a reverse DCF and see how high the bar is set. A lot of high profile stocks like this in the market now.

Mentions:#DCF

Or just build the expected dilution into the DCF model… not rocket science.

Mentions:#DCF

>I am not a math or valuation wizard but I know they use discounted value of future earnings or future cash flows or something. And they forward a few years to calculate that. Valuation professional here (CFA, MBA, business valuation for 18 years...). You would do a DCF of free cash flow to equity, not a DCF of the market cap divided by the active users. So, what's the annual FCF of reddit? Well, it was negative $100 million in 2022 and negative $84 million in 2023. https://www.sec.gov/Archives/edgar/data/1713445/000162828024006294/reddits-1q423.htm

Mentions:#CFA#DCF#FCF

So you're technically correct about how analysts calculate DCF valuations. However, OP isn't talking about discounted cash flows. They are talking about the current market cap which can absolutely be unrealistic. This is the entire concept behind value investing. I would not trust that $8bil valuation to be anchored by any sort of legitimate DCF valuation during the IPO hype phase.

Mentions:#DCF

DCF or compare its EBITDA multiple with similar companies.

Mentions:#DCF

DCF Calc [https://play.google.com/store/apps/details?id=com.equabyte.DCF\_Calc\_V1](https://play.google.com/store/apps/details?id=com.equabyte.DCF_Calc_V1)

Mentions:#DCF

It's an interesting stock. PayPal has been increasing netsales for many years in a row. Book value up as well. Netdept is - 5%. The price is down. Prognosis based on DCF (given current growth rate compared to 10 % interest) are a value around 107 USD right now. But the stock doesn't seem to be performing up to those standards based on the poor vision, declining user base, rising competition and lack of a clear MOAT

Mentions:#DCF#MOAT

Haha. I also just confirmed 100 shares, just enough to write a covered option contract if I wanted to. Assuming at max price $34 the IPO is over-subscribed My 5-year DCF came to $38.54 as an implied value, but I also wasn’t gonna lever up on student loans to do make a play. If they start crushing the data selling business maybe it’ll be the down payment on a house in a few years.

Mentions:#DCF

The program is called Canalyst by Tegus. They keep up to date models of analyst projections for the top 2 or 3k companies and you can drop in valuation templates and play with the assumptions. Without doxxing myself, I am a member of a program where this service is provided to me. With a quick Google, it looks like it costs 10k per year, sorry man. I will say though, you could prob sketch out the columns here on excel and then drop in income statements from yahoo finance Without too much work for free. More manual of course but lmk if you have questions about the DCF build out

Mentions:#DCF

Glad you’re interested too! My favorite books on audible may sound cliche, but they really opened my mind and provided a good logical foundation. Essays of Warren Buffet by Lawrence Cunningham A Random Walk down Wallstreet 12th edition by Burton Malkiel The little book of common sense investing by John/Jack Bogle (founder of Vanguard) Bond investing for dummies by Russell Wild Exchange traded funds for dummies 3rd edition by Russell Wild The intelligent investor by Benjamin Graham The spreadsheets I made myself which I pull information from yahoo finance statistics, cash flow, income statements, and balance sheets. I use a DCF equation for the first 5 years of estimate growth for a company then add a Terminal value for the perpetuity of the stock after 5 years discounted at 20% and assuming no growth to get a conservative estimate of a price. I look at how the company is financed, how much they pay in debt, their financing cash flow (how much they give back to investors), and put all the data in terms of per dollar invested, instead of $/share because different companies have different amounts of shares and prices, so you have to compare like units, so I use $/dollar invested. The SEC site EDGAR is all I really use as it is the most reliable and the information vetted by the federal government. I don’t listen to any analysts, but I subscribe to the investor relations site for a company I invest in to keep an eye on what’s happening. I’ll sometimes listen to conference calls for a stock on the Quartr app, but they can be boring and often contain little valuable information.

Mentions:#DCF

Very interesting! What are the good audiobooks that you listened to? What are DCF Spreadsheets? Do you only use SEC documents to get information on stocks? Or do you have other sources such as YouTube?

Mentions:#DCF

I listen to audiobooks on investing all day at work… some people would find that boring but I’m obsessed lol I also make intense DCF spreadsheets in excel and read lots of SEC documents (8Ks and 10Ks). I also don’t listen to anyone else, I just determine a price I would pay for a share of stock and see if the market is offering something lower, and when it gets higher I sell. If new information comes to light I am willing to change my previous judgement. For example, I bought PFE last October and sold it for a small loss once I got information that changed my buy price down to $21/share.

Mentions:#DCF#PFE

Don't forget to do your DCF valuations as you consider which stocks you pick. 

Mentions:#DCF

Ended up quickly skimming it for about 2 minutes starting at your suggested point since I figured it was just a basic DCF. It's medium growth case is about what I expect and aligns well with my predictions it will grow pretty quickly to be a ~1200 dollar stock and honestly I think there's a lot of room for the high case to be achieved and potentially beyond that given how much demand I think there will be for AI, especially once state level actors begin procurement in mass for defense, civilian agency work, and for university research in addition to the large corporations that already have large backorders.

Mentions:#DCF

I think you’re missing the part where the value of a stock isn’t based on staying power but it’s DCF. Aeronautics+Bad Quality= less contracts You decide what that does for future revenues and profits and then extrapolate from there what this means for the valuation of the company.

Mentions:#DCF

Oh sorry man I misunderstood the question. No I’ve never seen a company have a high PS compared to forward PE but I’d usually stay away if the PS is trading way above its net income multiple. Sounds to me like the stock is getting a hype around it that people are pricing in a massive premium relative to its earnings. If this was a real company I’d look at their actual cash from operations, FCF and DCF the price to see if it’s overvalued. Otherwise I’d stay away. The market for some reason is overly bullish on the stock. For example amazon was trading with a PE of 60 with a PS of 15. That’s already a high multiple but if the PS is as high as the forward PE I would be sceptical of their prospects for growth and I would call it detached from the fundamentals. Please correct me if I got the jist of your question wrong

Mentions:#FCF#DCF

Option value on what they have. Willing to make a bet on pre-monetization because I think $6.5B is nearly a floor price for this. 20% annual compounding user growth, new uses of mines of data, and there's plenty of $5B companies you've never heard of, while reddit is only becoming more and more well-known. I think demand for the stock (5x oversubscribed), and option value on its data property is more indicative of value than a DCF valuation (if that is what you're driving at) that I believe is an archaic philosophy in today's market. Play is to sell on IPO pop on Day 1, targeting 100% returns, will then buy back entire position on Day 2, doubling my share-count to 2,000. Thereafter, I'll wait for an options market to develop and will grab OTM leaps at $50 strike.

Mentions:#DCF

I do not totally agree. I have done zero math on the companies in my portfolio and they have all done quite well. Granted >70% of my portfolio is actually SPY, but I think you can come up with valid theses (or a worldview) that can drive solid returns without doing a DCF or any actually valuation. 

Mentions:#SPY#DCF

Let’s see how it shakes out dude. You have no idea on the numbers and are investing with your feelings. I sold at 500 (~70x return) because I thought people wouldn’t be any more unreasonable than they were at that time. I might not be good at timing stupidity but I know an overvalued company if I see one. If you are so confident then give the highlights of a DCF which justifies this valuation. Otherwise keep pumping with your cope. If you don’t understand the tech, the numbers , or the market then you shouldn’t be investing or giving any advice. Let’s revisit this chat in a while as see. You might have a different username by then.

Mentions:#DCF

I did a DCF, projecting out revenue based on user growth (YOY by quarter) and ARPU growth, and did a deep dive on their owed stock based compensation + deferred taxes and got to a valuation of $31.7 in a slightly down case, $34.5 in a middle case and near $40 in an big up case. Besides user growth and average revenue per user, data licensing will likely grow, and they’re sitting on $1.3B in cash and another Billion in networking capital, which I’m not sure why that’s the case. Besides being used for runway they’re averaging 4% returns on the cash, so I assume they have it stuck in a T-Bond ladder. I’m throwing a few grand in but I’m not betting the farm either. Might write covered put options to all these Yolos willing to pay me premiums for it.

Mentions:#DCF

the issue is quite a bit of the small caps are either unprofitable, or finance operations from debt. in a rising interest rate environment, this greatly spooks investors on both of those concerns. DCF's discount future earnings harder (lower stock prices), and future earnings can be expected to lower because of increased interest expense as these debt laden firms roll over debt at higher interest rates. there's also the issue that alot of small cap constitutents are small banks, which are facing commercial real estate issues & falling capital reserves due to reduced prices for treasury bonds. a lot to hate, but if there is any change in expectations about fed cutting rates, the sector will rocket. something to keep an eye on, and average down as interest rate expectations rise (such as this week, yesterday)

Mentions:#DCF

It means various present and expected future outcomes are inputs into a DCF or related financial model that outputs the present value of a company / share. 

Mentions:#DCF

Hey man, not disagreeing that there are other points of comparison that could be done against TSLA with way more competitors but I was trying to keep my research compact. I believe that everyone will get a pie of the EV market, the difference is who gets the most. I genuinely do believe that a long laundry list of points of comparison would not really add much value because this is a DCF rather than a “list of reasons to buy one EV brand over the other”, so for simplicity I looked at existing customers and what is the rate they are likely to convert to another brand and TSLA is the lowest, https://customergauge.com/benchmarks/blog/tesla-nps-score#:~:text=A%20recent%20study%20from%20Experian,car%20bought%20a%20new%20one.

Mentions:#TSLA#DCF

Someone asked where I got 25 as an exit multiple, and I wrote a response but then they deleted, so here is my explanation: > Just a random number mostly, seemed like a reasonable choice for a company that is growing at triple digits, taking market share away from Monster, increasing margins. Damodaran in his spreadsheets provides median EV/EBITDA or EV/EBIT multiples for every industry. For soft beverages, the average is about 18 and 21, respectively, so I gave them a bit of a premium due to their success so far. [Here is the DCF using 18 as an exit multiple on final year EBIT](https://i.imgur.com/fdQlNNC.png). Intrinsic value goes from $150 to $112. > > For what it is worth, Damodaran's spreadsheet (screenshot #3 in post) does not use any kind of exit multiple. That was only for my rough DCF.

Mentions:#DCF

I wrote this 12 days ago ([link](https://www.reddit.com/r/stocks/comments/1b2x8gt/rstocks_daily_discussion_options_trading_thursday/ksrcxbl/)): This is not financial advice / DYOR, but here's my quick take on CELH. I have shares at $54 and it's 1% of my portfolio. I'm going to be less conservative now with my assumptions thanks to this good report. - This report reaffirmed my confidence in near triple digits revenue growth near term and high double digits this decade. - The rise in gross/operating margins was a welcome surprise. 20% operating margins for this past year, and to be conservative assuming it stays at 18% indefinitely. - Expecting analysts to start significantly revising up their growth expectations going forward. Forward P/E should come down. - I now have more confidence projecting strong growth ahead. In my simple DCF model, I'm going to assume 80% growth in 2024, 60% in 2025-6, and 50% in 2027-2028, then an exit multiple of 25. Discount rate 15%. My new intrinsic value is closer to $150 (83% higher). [Screenshot](https://i.imgur.com/iDRQvno.png). - If you made me use a conservative model, say 60% growth in 2024 then 40% growth through 2028, then exit multiple of 25 implies fair value $91 (12% higher). [Screenshot](https://i.imgur.com/oql3WI9.png) - Using Damodaran's spreadsheet I mentioned yesterday, where I used 80% growth in 2024, 19% operating margins indefinitely, then 50% growth years 2-5, then 4% growth in perpetuity (risk-free rate), sales/capital ratio of 2 falling to 1.76 (slightly higher than industry median). Get fair value of $130. [Note this method doesn't use any kind of relative multiple.] [Screenshot of results in his 'summary' tab](https://i.imgur.com/AYQkkfu.png) The sales/capital ratio I used is consistent with a 28% ROIC in 10 years. (Thoughts on if that is reasonable? I was most uncertain on that ratio) My conclusion: Company is certainly fairly valued today, and in the best case 100% undervalued. I don't know if I'll be buying today besides occasional DCAing, but if the company falls back to $50s-60s I may significantly increase my position.

Quality doesn't matter. People still buy them. And pay the dealership to repair them... monthly in the luxury division of the market. Stellantis is politically well positioned. The Agnelli interests are very powerful and jet set with people behind present day environmentalist policies. They are within the top tier of influences moreso than other car company executives. Car companies make money by selling cars that are unreliable, break but fulfill consumer need for status. **They are luxury goods.** Asian made cars are the new economy class everything else is luxury. Super luxury vehicles, Rangerover, Audi, BMW and Mercedes also suck for various reasons (over-engineering, unexpected engine seizures, not designed for daily driving, etc.) Even still people buy them and take them (monthly sometimes) to premium mechanics. Probably the only reliable car brand overall, Toyota, is now cashing in and starting to drop quality or possibly even install programmed obsolescence in their products. The DCF for Stellantis is enormous. Stellantis could buy most of its competition TWICE. The fair value of the company is in the 10x range if it was an American stock.

Mentions:#DCF
r/stocksSee Comment

After calculating FCF as Cash Flow from Operation - SBC - Capex, the P/FCF ratios of QQQ's largest components are: AMZN: 222 TSLA: 222 NVDA: 98 MSFT: 54 META: 43 AVGO: 39 GOOGL: 37 AAPL: 28 The growth implied by those ratios is immense and future returns are likely to be far lower than historical returns. But few care about DCF analysis anymore so whatever.

>What I understand is irrelevant, this is how the people who move market prices think it works, therefore it is. Exactly! But we cannot know with any certainty that "people who move market prices" follow the DCF model or some other secret formula. Furthermore, to think that all buy/sell decisions are driven by rational analyses is naïve. Professionals are human like the rest of us and subject to the same emotions. When stocks like NVDA or SMCI have parabolic runs, it is not solely because people have applied some formula to determine the stock is worth more. There are plenty of traders who care less about fundamentals and trade solely on momentum. This is why I do not bother to dive deep into fundamentals and assign some arbitrary "value" to a company. It is easier and more reliable to follow the footsteps of the people who move markets. We do not have to know *why* they do it, only the result.

The real canulation is called DCF. If you want to assume a constant growth rate forever, you can use Gordon growth model.

Mentions:#DCF

A company can be fairly priced at any P/E, including infinite. Consider P/E compared to DCF. DCF is the discounted cashflows of a company many years into the future. TTM P/E is based on the cashflows of the company for one past year. If a company has constant earnings every year going forward, then P/E is the inverse of expected return, like a bond. And like a bond, high P/E directly translates to lower future return. But if a company is expected to grow earnings into the future, it could have a low or even negative earnings this year but still a large positive total amount of earnings in the future. Generally the larger the growth rate, the higher P/E would be at fair value, but it's not strictly proportional, especially when current earnings are zero or negative.

Mentions:#DCF

The pricing is absolutely based on DCF. Which considers all future cash flows on a discounted basis. It’s also worth nothing cash flows 10+ years away aren’t that impactful because of the time value of money.

Mentions:#DCF

An average of DCF and RV

Mentions:#DCF

An average of DCF and RV

Mentions:#DCF

It’s almost as if they change their estimates willy-nilly in order to back into a DCF value which is in and around the current trading share price!

Mentions:#DCF

You bet. I suspect that Warren Buffett uses a variety of valuation models. DCF is the best-known, but there are others, too. It can be hard to apply them to a small and quickly growing company because modeling valuation depends on assumptions about the future that we're only guessing about. It's very different if you have a mature dividend-yielding company. With those, valuation modeling can be quite accurate and grounded in solid assumptions. If you're interested in learning how to do this, you may want to pick up a copy of the soon-to-be-released (this month) second edition of: [https://www.amazon.com/Little-Book-Valuation-Company-Profits-dp-1394244401/dp/](https://www.amazon.com/Little-Book-Valuation-Company-Profits-dp-1394244401/dp/) If you prefer a more hands-on approach in Excel, consider taking these two courses: [https://www.udemy.com/course/the-complete-financial-analyst-training-and-investing-course/](https://www.udemy.com/course/the-complete-financial-analyst-training-and-investing-course/) [https://www.udemy.com/course/the-complete-financial-analyst-course/](https://www.udemy.com/course/the-complete-financial-analyst-course/learn/quiz/266210?components=add_to_cart%2Cavailable_coupons%2Cbase_purchase_section%2Cbuy_button%2Cbuy_for_team%2Ccacheable_buy_button%2Ccacheable_deal_badge%2Ccacheable_discount_expiration%2Ccacheable_price_text%2Ccacheable_purchase_text%2Ccurated_for_ufb_notice_context%2Ccurriculum_context%2Cdeal_badge%2Cdiscount_expiration%2Cgift_this_course%2Cincentives%2Cinstructor_links%2Clifetime_access_context%2Cmoney_back_guarantee%2Cprice_text%2Cpurchase_tabs_context%2Cpurchase%2Crecommendation%2Credeem_coupon%2Csidebar_container%2Cpurchase_body_container#overview) I have to warn you that if you're not quantitatively oriented and don't have an MBA, these will probably knock you on your ass (to use the clinical term).

Mentions:#DCF

Thanks for posting. So is this a similar or same method to how Warren’s Buffett values company intrinsic value with DCF analysis?

Mentions:#DCF

SBC is a non-cash item. It just dilutes your ownership of the company. So to value it in a DCF, you take the FCF number for each period and adjust your ownership of it (on a cumulative basis) by the dilution from SBC.

Mentions:#DCF#FCF
r/stocksSee Comment

Yes I modeled it out. Lose ~2% of ownership through dilution per year due to SBC. Their FCF yield is 25-30% which is incredible margin. Even with the compounding 2% dilution, with the projected FCF generation my DCF is showing it’s undervalued by a decent margin.

Mentions:#FCF#DCF

Tesla is also pretty much flat production for the year yet they are worth 600B. A DCF valuation factors in more than just one year of revenue

Mentions:#DCF

Stick to your guns. The fair value DCF is as high as $200. Wait until earnings. https://preview.redd.it/0iqwixzcvrmc1.jpeg?width=1290&format=pjpg&auto=webp&s=fa6b86103d3535b25e7ba83ba6e34cde51b5a470 Remember Amazon is a growth story that’s not changing anytime soon.

Mentions:#DCF

Been selling exposure for a couple of months now. Like anything with AI in the description it is getting ahead of itself. Not in too absurd territory but lofty. But it’s been really profitable trade for me as lots of people want to bet on a big spike so IV has been generous and I just kept selling calls slightly above reality. I just take my slice of that over and over and over. But I’m about to move on to greener pastures unless earnings disappoint but mgmt reaffirms its commitment to AI madness. Backward looking DCF suggests ~$60’s, now in $80’s so market is going to be looking for A) rev for AI related and B) guidance on AI potential. These guys are moatey and specialized chips are big and long term investments.

Mentions:#DCF

AVGO closed at $1,342.75/share yesterday. It's most optimistic 10-year DCF fair value is $1,367/share. Anything is possible, but with IV climbing, I wouldn't want to personally chase AVGO. I wish others who do good luck with earnings! I think a lot will depend on guidance.

Mentions:#AVGO#DCF

search phrases like "revenue multiple" and "DCF analysis"

Mentions:#DCF

How are you valuing PHO to say it is undervalued? If you look at the top 10 holdings of these ETFs, the majority of them are overvalued on a DCF basis. Water, like petroleum is an essential commodity, but it's just that, a commodity. What moats could these companies develop to create high margins if everyone can pump it out of the ground or take it from the air or desalinate it from the ocean? Given its essential nature, governments are very likely to limit water prices for public good, like they do with internet companies, housing, or gasoline. If i'm investing in a company, I don't want them to be hamstrung by the government on how much they can charge. These ETFs aren't exactly cheap either, with PIO's expense ratio at .60%. Compare this to the performance of Vanguard's MGK for example, 136% over 5 years, with an expense ratio of .05%.

How can you say this when even using Buffett's method for DCF it shows AAPL is severely undervalued?

Mentions:#DCF#AAPL

DCF literally stands for discounted cash flow. The rest of your comment I agree with!

Mentions:#DCF

Just so u know it…. All valuation methods done right will lead to the exact same intrinsic value. However you are choosing the most difficult method to value a bank using DCF. Think of money for banks as inventory for other companies. RI or DDM should be way more easy. Good luck

Mentions:#DCF#DDM

That's not true, you’re confusing the idea of discounting cash flows with a DCF (which discounts a specific type of cash flow). A traditional DCF discounts the free cash flow to the company, which is a pre-interest metric. You can't value a bank's cash flows using a pre-interest metric because almost all of any bank’s revenue and expenses are derived from interests... A dividend discount model works just like a normal DCF, but instead of discounting the free cash flow to the company, you discount the actual dividends paid by the company. Dividends are discounted at a different rate than cash flows in a DCF (cost of equity instead of WACC), which indirectly solves OPs issue.

Mentions:#DCF#WACC

Has anyone used the Everything Money stock valuation tool? I'm keen to create one of my own in Excel as I imagine it is just formula driven. I've tried following a video on yt but its difficult for me to follow all of it as he doesn't show everything. Search 'everything money spreadsheet' to find it. I've managed to get it working to show the Multiple of Earnings Value (However, the 'Share change' and 'DCF% Revenue' have no impact on the figure so I'm keen to know how they are integrated in the formula.) I also have no idea what to put in the DCF value. I have used the following random Assumptions (attached) for Apple stock. It's completely random numbers and just used to see if it works. Let me know what you think and what formulas you think I can put in to show the DCF value. Also, how I can integrate the 'share change' and 'DCF%Revenue' into the computation.

Mentions:#DCF

When dealing with high IV the rule is: Pigs get fat, hogs get slaughtered. I like high IV but I make sure I am selling (not buying) only on fairly valued or undervalued underlying tickers. I have a life so I want positions that don’t require constant attention. Even when dealing with undervalued stocks you can get crushed randomly. So avoid earnings,put news alerts in place. I tend to look for positive momentum along with high IV. With high IV you are going to have to accept some losses along with the wins. I use a DCF analysis which requires some work so I tend to stick with a ticker for multiple iterations. I try to stay in industries I understand. I want to understand the catalyst that is driving the high IV (if the catalyst is reddit BS I avoid) and monitor that closely. Often times the catalyst applies across the industry so multiiple stocks can be played at the same time. I’m good times yields tend to be around 4%-8% per month. Occasionally you’ll find a 25%-30% month situation, High IV is limited to my higher risk portfolio allocation. I rarely run more than 5 or 6 tickers at a time. Lately ex. MRVL, CRSP, MSOS In Low IV situations I like the low beta dividend kings as I can layer short calls across earnings while avoiding ex-div dates. These tend to be slow and steady rinse and repeat strategies and fall into my lower risk allocation. Yields tend to be < 20% annum. These are boring, repetitive, require little attention and it’s easy to repeat over and over. Ex. VZ, XOM Or you can stick with low beta under or fairly valued stocks and do calendar spreads, Short CC’s, bullish put spreads. Generally when overall market volatility is low and I can’t find an exception I find stock picking or holding compounders to be more valuable.

Continuing with some more weekend DD (you can find my takes on AMR/HCC/RCM below). Now I'm on Crox. I've mentioned before I've done some [simple DCF modelling before](https://www.reddit.com/r/stocks/comments/1arcj33/rstocks_daily_discussion_options_trading_thursday/kqllmgj/) and my conclusion is the stock is fairly valued using consensus revenue estimates and very conservative multiples. But if you allow for multiple expansion the stock is very undervalued. I consider these 'base cases' though. How about a more dramatic bull case? Someone who sees a triple? For that, I recommend reading this [VIC write-up](https://valueinvestorsclub.com/idea/CROCS_INC/0600213403) on CROX from August 2023. This author clearly knows this company inside-out and presents some very intriguing points on why you should look past Hey Dude weaknesses and why this is a management to trust. Also, I would read all 27 comments for some back and forth. I'll give a brief summary of some of the most interesting points: - The reason Hey Dude seems to have decelerated so viciously was due to pipeline fill. CROX bought Hey Dude and needed to distribute it to its existing channels. This means a sharp one-time increase in wholesale purchases just to get it on the shelves, so the comparables were always going to look rough. If you strip out the portion of demand that is actual consumer sales, that looks like much steadier growth. It's also likely CROX messed up and put out too much product on the shelves, forcing discounts. But it's been a few quarters and by now the worst of the inventory overhang on the shelves is over. - Hey Dude hasn't actually finished expanding internationally - It's only 20% of the business and 80% is their stronger Crocs brand - They have swiftly met their net leverage targets and are now open to massive share buybacks (now at 1.3x net debt / EBITDA, in their target of 1 to 1.5) - This company has often had periods of mispricing which leads to huge opportunities. The company nearly 20xed from Covid lows. - Insiders are showing confidence with many buy signals - The pre-2017 business saw terrible management, and the company has fundamentally improved since then with their new marketing strategies, no more channel stuffing (which forced discounts of CROX by third-party sellers). - There has been a cultural shift around wearing CROX that occurred around Covid time but is persisting. (But it's also happening in China, suggesting this is not some fad unique to the US) Long story short, this guy gives several scenarios with fair value ranging from $73 to $538. Read the whole write-up to see which scenario seems most reasonable to you. I came away thinking my own modelling was way too conservative, and I now believe the company is still quite undervalued. I may add more shares in the near future. Position: Shares at $87 cost basis, 1% of port. ---- On a separate note, but on December 3rd, 2023 I wrote about a company called ORN. I didn't really take a long or short viewpoint on it, was just summarizing it. But it appears the long story is seemingly working out, with the company's stock up 38% since then. They provide marine infrastructure services, some of which is very specialized underwater operations. It's a very deep value type of company, with past issues of horrible margins in some of its acquired businesses. The bull case is that management finally starts targeting high margin business and not just adding sales for the sake of adding sales. I'm still not interested in the company but mentioning it in case anyone is.

Well that’s the whole story with R2. CLEARLY people love their vehicles. They sell more R1Ss than Tesla sells MY. They are the best selling vehicles of their class and get amazing customer reviews. It’s not a difficult Story to tell that they can ramp up to 500k+ EVs in the next few years with R2. I’m not sure how the market can price in Tesla for solving global hunger and AI while Rivian can be priced in for a reasonable size of the EV market in a few years from now. Need to focus on long term DCF valuation of the business not quarter to quarter.

Mentions:#DCF
r/stocksSee Comment

Do some googling on an excess equity model. That ls the equivalent of a DCF for bank. Just use a cost of equity. AGM isn’t a bank though. They operate a spread business so focus on what actually drives the company not the cost of debt.

Mentions:#DCF#AGM

Why did you block me after making this comment? It makes no sense unless you are stuck on your ways and don’t want to learn. Cash flow is actually all the matters. If I go and run a DCF using consensus cash flows minus a margin of safety AND still find a present value (less net debt) greater than the current market value then I’ll buy the asset all day. You’d be surprised how many of these opportunities pop up and people emotionally sell at any price. What I wont do is “buy at any price”… and that goes for the S&P 500.

Mentions:#DCF
r/stocksSee Comment

You shouldn't use a DCF to value a bank, as they behave completely different from other traditional businesses. The closest thing to what you want to do would be a dividend discount model, for which you don't need the cost of debt, solving your issue.

Mentions:#DCF

The belief that you can predict future stock prices based on DCF is the kind of story and narrative that *you* have blindly bought. DCF is already reflected in the price. You're just reading tea leaves or casting chicken bones or looking at cloud shapes.

Mentions:#DCF

So, I've had another thought. It's like a DCF analysis DCF tells you if it's better to take $100 today or $105 in a year's time. It accounts for inflation and interest rates / some other opportunity cost But it doesn't account for the utility you get from what you buy with that money. You need to bake that into your personal DCF to know whether to spend or invest E.g. if the girl of my dreams is in front of me, spending $50 on a date with her now is infinitely more valuable than $55 in a year when she's long gone If I've got 1 year to live, my discount rate is practically infinity - it doesn't matter how much I'll get in a year if I'm dead

Mentions:#DCF

LOL no, it can't. Not on even the most delusional DCF valuation.

Mentions:#DCF

Do you not run DCF scenarios for your potential investments? Are you just blindly buying stories and narratives?

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I used very aggressive FCF assumptions in a DCF and it came out as 50% overvalued… how else should I describe it?

Mentions:#FCF#DCF

You don’t seem to understand that impairment of good will means that the productive assets that the goodwill recognition stemmed from have been revalued, typically due to updated DCF analysis, and those reduced cash flows are expected to remain depressed indefinitely. Unlike other intangible asset impairment goodwill is irreversible. You don’t have a clue about accounting it seems but why let that stop you right? It’s funny how the most uneducated ignorant people on here are the quickest to assume they understand everything. I’m just a dumb CFA though so I’m sure you have a lot to teach me and you probably manage a lot of money. 🙄.

Mentions:#DCF#CFA

This is not financial advice / DYOR, but here's my quick take on CELH. I have shares at $54 and it's 1% of my portfolio. I'm going to be less conservative now with my assumptions thanks to this good report. - This report reaffirmed my confidence in near triple digits revenue growth near term and high double digits this decade. - The rise in gross/operating margins was a welcome surprise. 20% operating margins for this past year, and to be conservative assuming it stays at 18% indefinitely. - Expecting analysts to start significantly revising up their growth expectations going forward. - I now have more confidence projecting strong growth ahead. In my simple DCF model, I'm going to assume 80% growth in 2024, 60% in 2025-6, and 50% in 2027-2028, then an exit multiple of 25. Discount rate 15%. My new intrinsic value is closer to $150 (83% higher). - If you made me use a conservative model, say 60% growth in 2024 then 40% growth through 2028, then exit multiple of 25 implies fair value $91 (12% higher). - Using Damodaran's spreadsheet I mentioned yesterday, where I used 80% growth in 2024, 19% operating margins indefinitely, then 50% growth years 2-5, then 4% growth in perpetuity (risk-free rate), sales/capital ratio of 2 falling to 1.76 (slightly higher than industry median). Get fair value of $130. [Note this method doesn't use any kind of relative multiple.] My conclusion: Company is certainly fairly valued today, and in the best case 100% undervalued. I don't know if I'll be buying today besides occasional DCAing, but if the company falls back to $50s-60s I may significantly increase my position.

Mentions:#CELH#DCF

Umm I’m not looking for you to explain DCF. Any price target is based on assumptions. Any model of the future if based on assumptions. If you have trouble with non-operating income, you can exclude that. I’m a CFA Charterholder so I can see right through your argument. Those things you mentioned are called non operating income.

Mentions:#DCF#CFA

Well for starters no one uses net profit bc it has non cash expenses in it so would be a terrible proxy. Next, a DCF is only as good as the assumptions so depending where you work you may be building out a detail revenue model where you forecast units sold / margin / market expansion EtC. Also, as mentioned before assumptions, we will often calculate items like depreciation / capex/ working capital using different approaches as each company is different. (Cashless net working capital if a company has a lot of non operating cash) I can’t really explain a DCF easily by text bc it’s still a complicated model. Enjoy

Mentions:#DCF

Aswath Damodaran posts so many amazing resources (spreadsheets, YouTube videos) on valuation. For example, he recently made a video 2 weeks ago explaining how to use one of his valuation spreadsheets ("fcffsimpleginzu" on his website). The spreadsheets are really complicated (there are like a dozen 'tabs' in the Excel file), but you can make simplifications as needed, e.g., select the 'No' option on all the bells and whistles he provides such as capitalizing R&D or handling outstanding stock options. A lot of the data is computed once you enter things like country or industry, such as the cost of capital. Anyway, I just went through the exercise for CELH, and long story short, I have discovered the company is within 1% of fair value lol. I don't really love this though because it's really convoluted to see how my assumptions impact value like my barebones DCF. Do you *really* have to spend an hour capitalizing R&D, breaking down revenue by country to find a weighted average cost of debt incorporating the different risk premiums? Here's hoping to another year of triple digits growth!

Mentions:#CELH#DCF

They are trading at a discount becuase for the last several quarters their earnings per share have been negative. The main reason for that was probably their attempt to expand into furniture sales that was less sucessful than they expected. But, just because they have been making losses recently, doesn't mean they always will. They only need minor improvements to revenue and operating costs to be in the black each quarter. In 2023 they had 5.468 billion in revenue and 5.730 billion in operating costs. In 2019, they had 5.238 billion in revenue and 5.020 in operating costs. Now, obviously, interest rates were different at that time so if you were building a DCF model of the company you would have to use different discount rates today, and we shouldn't expect the intrinsic value (or share price in the long term) of the company to be the same or higher than it was in 2019, but it would certainly be higher than $10. They only need marginal improvements to revenue and operating costs to have positive earnings per share, and then the shares should be valued higher than $10. That's where the low debt and long runway part of the story becomes relevant. BIG has a long enough runway that they have time to make it happen.

Mentions:#DCF

Ideally you need to forecast future financials (5 years preferred) from revenue down to free cash flow. Then run a DCF on those figures to arrive at estimated enterprise value. Compare that estimate versus current trading enterprise value, and that would drive a recommendation from a fundamental perspective

Mentions:#DCF

Significantly and materially under IV using Buffett's exact same DCF method. What does it mean to you lol...? Let met guess u/Boss1010 says "it's all a scam bubble and my balls tell me everything is beyond overvalued."

Mentions:#DCF

Significantly and materially under IV using Buffett's exact same DCF method. What does it mean to you 😂?

Mentions:#DCF

i dunno. would need to do a DCF and put together comps analysis but there's a blended value in there that can certainly be calculated conservatively as a baseline expectation. Make sure to forecast/price based on forward expectations and not current outcomes. While the fair value is certainly below whatever it trades at now, it's also definitely above 0 too lol.

Mentions:#DCF
r/stocksSee Comment

Lol that DCF was done by a golden retriever

Mentions:#DCF

Just released my app that helps you build DCF models fast. Looking for feedback! http://terminal.accelno.com/#/register?invite=MZZWG2DXNFRWQ5DFNZRGK4THIBTGC3DDN5XC4YTFNZ2GYZLZFZSWI5I=

Mentions:#DCF#XC

DCF on NVDA is $1108. The people screaming bubble like Cisco in dotcom read the short seller hit pieces and regurgitated it like good little sheep. I bought calls and made off with their weak paper handed money.

Mentions:#DCF#NVDA
r/stocksSee Comment

Charley Munger once said no stock is worth an infinite price. This basically means that there is a price at which a company no matter how great it is will be too expensive to justify its current market price. In my view, the only realistic way to determine this point is via valuation. To be clear I'm not saying you need to sit down in front of a spreadsheet and build a DCF model. But the numbers need to make sense. I'd argue that this was true for both Nividia and Apple back in the 2014-2015 time frame. A quick Google search shows me that Apple's PE was below 15 all the way up until 2018. While I'd guess that if you anaylized it back then you'd come away with the opinion that apple was modestly undervalued.

Mentions:#DCF

It's an individual decision and there is no one easy rule, but I would suggest two things to help decide: 1. Portfolio allocation: define your investment portfolio and allocate a percentage to cash or short terms bonds (e.g. 10%, totally up to you) and maybe an allocation to a boring index fund (totally up to you but anywhere between 10% and 80% depending on how much you want to invest in specific stocks). Then, aim to maintain a fixed % split between these 3 buckets, and do this every 6-12 months. So for example, if AMZN+NVDA etc. become more than your target % then sell enough to bring them back to the target. This will take out the emotion and guessing. 2. Educate yourself about fundamentals and valuation, so you are able to recognize when a stock is very overvalued and it might be a good time to sell some. There are many different ways of doing this and no perfect way, but I often use the Morningstar "fair value estimate" as one of my reference points, since they do a proper DCF valuation and seem to be fairly neutral/unbiased. I would also look at the valuation ratios (P/E, P/CFO, EV/EBITDA etc.) and compare these against history of the same company and against similar companies (with similar growth rates and profitability), to get an idea of whether the valuation looks very stretched. Not super scientific, but you are just trying to establish whether the company is getting too high and you should take some risk off the table. I hope that helps. In short, right now I would definitely take some money off the table and either hold a bit of cash or invest it in something less at risk of a bubble (e.g. equally weighted, value or dividend ETF).

Why would you short a company that was almost certainly going to crush earnings and is almost 40% below the price of a their DCF?

Mentions:#DCF

Damodaran is a circle-jerking academic. Recognized, yes. Smart? Hardly.  Anyone who defaults to performing DCF analysis outside of utilities companies is probably enamored with the smell of their own farts.

Mentions:#DCF
r/stocksSee Comment

Started my position today in PANW. Guidance is interesting. Not going to give a full breakdown of my opinion but it’s kinda validating what FTNT recently said in their recent EC. Would be happy to see drops into the low 200’s or below for me to fully allocate a full position. Edit: I re-read the post you referred to. Holy shit his DCF said $40. 😂 Yeah that’s a blatant miscalculation or complete lack of understanding of the industry.

r/stocksSee Comment

i'm pretty close to this industry and also sold off prior to earnings. i do expect it to drop much much more over the next few months: PANW and many of it's peers really pulled bookings in over the last 12 months. there were simply no more to pull forward: they stuff licenses and seats into every company they possibly could and discounted to the moon. now there is nothing left to pull forward and their customers are in recession (the other 493 S&P stocks). it will take time for them to need to sell more licenses... but if their teams remain competent it can recover. HOWEVER, i don't know how much of a wildcard this AI stuff can bring. maybe it further pushes their style of security into obsolescence. maybe there is a larger recession and their customers who license by headcount reduce their licenses. maybe their customers go out of business (to an extent) or consolidate (like COF and DCF). i think this is a great wait and see moment. and yah like others said, if NVDA falters tonight, well, i hope you have lots of cash prior to market close.

r/stocksSee Comment

I'm sorry that statement, in my personal view is completely wrong. >"Don't look at economics to predict the future. If you spend 13 minutes a year on economics, you've wasted 10 minutes. Focus on your companies." The reality is that stocks are a finite good with incredible demand but extreme scarcity. It's called inelastic market hypothesis, likely leading to a Nobel Prize. Another poster provided these links, I'll repost them here: [In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis by Xavier Gabaix & Ralph S. J. Koijen](https://www.nber.org/papers/w28967) [The Inelastic Market Hypothesis: A Microstructural Interpretation by Jean-Philippe Bouchaud](https://arxiv.org/abs/2108.00242) As long as economy is booming, jobs keep being added, trillions in buybacks, 401k passive investing, etc. will relentlessly push market up unless something causes a shock of liquidity. Second, valuations are totally reasonable. NVDA has forward PEs in the 30s which is nothing considering its future growth and potential. You don't like NVDA? **GOOGL at 24 PE** is DIRT cheap assuming long-term FFR of 2% and historical term premia of 1.5%. Do a DCF just like Buffett's method and YES you will find it way, way below IV.

r/stocksSee Comment

I’m curious why you think they overproduced. Management has said that they are still trying to build up inventory in their latest special call. Do you think they’re gaslighting investors? I’d be surprised considering the quality of their management. Or maybe I misread something? I’ve found that the mistake people make with cyclicals is thinking they’re cheap when earnings are highest and the PEs are lowest. At 23X earnings near the bottom of their cycle, they are insanely cheap in my eyes. They’re investing heavily for the future and have consistently delivered 25% returns on invested capital. To me, this is when you should be investing, and 10-20% in either direction right now isn’t going to matter in fifteen years. I’m not a DCF/fair value investor as much as I am a quality investor. I plan to hold TXN until they no longer have a fortified moat around their business, which doesn’t seem to be coming anytime soon. Time and again you can see throughout history analysts saying a great company is “overvalued” at 25-35x earnings only to watch that company continue compounding at 15%+. That’s why the Coscos and Amazons and Constellations of the world will never be at “fair value” in the eyes of a dyed-in-the-wool value investor. If you look at investors who evolved from traditional value into quality investors over time, they hit their highest gear when they made that transition. Those are the two big reasons why I’m buying now. By the time they announce increased demand because of a semiconductor upcycle it will be too late. The stock will have outrun your patience. That’s just my opinion though.

Mentions:#DCF#TXN

Yeah. Of course Ppl like you and I are gambling in the markets. We are not investing. Our thesis is to make money off the guy rather than evaluating based on a DCF model.

Mentions:#DCF
r/stocksSee Comment

> what do people look for when researching a stock? Low price relative to intrinsic value with a reasonable catalyst within the nearish future (ie within 5-10 years) >stock patterns Hocus pocus*. The only “stock price patterns” I care about are statistical arbitrage. >reliable research Bloomberg, equity research reports, etc Anyways OP, learn how to do a DCF. I suggest picking up this book if you’d like a walk-through https://www.amazon.ca/Investment-Banking-Valuation-LBOs-IPOs/dp/1119706181

Mentions:#DCF
r/stocksSee Comment

More stocks, less politics today for me: I have a pretty small position in CELH ($53 cost basis, so not early to the story). Here's a [short & simple DCF I made.](https://i.imgur.com/CL6Ft1C.png) I think 40% growth will be quite effortless for them assuming [they successfully expand overseas](https://i.imgur.com/ysEn2Wa.jpeg) (which they are starting to do, e.g., announcing entry into Canada and the UK last month). [Third party metrics look very promising](https://twitter.com/BevInsights/status/1753422685634216435). Stifel is expecting 99% YoY growth in Q4 vs consensus 85% (they recently raised their price target). Forward P/E of like 84 sounds atrocious but this is more than justified given the wild growth. In 2018-2023, here are the revenue figures: 52M, 75M, 131M, 314M, 654M, and 1.3B expected. 40% revenue growth going forward is actually a steep slowdown for a pretty new growth company.

r/optionsSee Comment

First deltas are calculated by formula and cannot predict the future only guess (in a sophisticated way). They are theoretical and premiums may not change as the delta attempts to predict. If bid-ask spread or trading volumes divert from the theoretical delta predictions do t hold up. If I was neutral on a particular stock or didn’t really know much about it then yes I’d be paying attention to delta. But that is not my strategy. I am selecting stocks based on DCF valuations, buyer enthusiasm (a.k.a. Trading volume) as reflected by IV, and near term catalysts for price +/-. There is somewhat a correlation between the strikes I select and deltas but it is not what I use for decision making. On selecting strikes: the underlying goal is to select the optimum balance between risk and reward. If I feel there is -bullish potential go slightly OTM -strong bullish hold - don’t write -neutral stay ATM or slightly OTM -potential negative one or two strikes ITM. -Strong negative - flush the whole strategy and go look for better strategy to fit. The thing is I aim to be exercised. Combine that with 12-20 dte, chasing the higher IV’s, and stocks selected for asymmetric potential returns over risk, the net result is that the dozen or so tickers I work with changes a lot over time and the gains are incremental. This is not the type of strategy a quant, a call speculator, theta harvester or someone looking for a long term strategy to play out. One of my tenets is pigs get fat, hogs get slaughtered.

Mentions:#DCF
r/stocksSee Comment

Do some qualitative and quantitative research. Read the companies last 3 annual reports, understand the business in and out, and come up with investment theses on why it’s a good company to invest on (could be strong balance sheet, new expansion, strong customer base, price increase on products etc). Then back up your investment thesis through qualitative research when analyzing the financial statements. You can do a comps analysis, DCF analysis (those are the big two) or just forecast the 3 statements. The truth is, making money from the stock market is not as pretty as it looks, most of the time, your just spending long hours reading reports and building out models in excel

Mentions:#DCF

I commented on your strange treatment of bond volatility, but it's not super important to your original post, or this question you just asked me. I apologize for Cunningham's lawing you. I am not sober, which may or may not affect the quality of my answer. 100% US stocks includes some REITs. VTI counts real estate as 2.9% of its portfolio. Granted that's not a lot when you think of the entire (mostly private) (unlevered) real estate value in the US being probably larger than the market cap of public US stocks. A balanced portfolio aligned with overall economic market cap rather than public market cap would have more real estate than you see in most model portfolios (excluding the Talmud portfolio and maybe a few others). To me, that suggests that one should look into some local real estate investments, not overweighting public REITs. The problem with that is that real estate is a less efficient market. People buy with non-investment goals, sometimes raising prices above DCF value. On the flip side, particularly in geographical areas with less capital, you can find good deals with prices below DCF value. it's also hard to get good experience and diversification in that market when even a small property is tens of thousands (equity, mortgaged). And it takes more effort to manage than just passively buying securities on the efficient public stock market. So, why are REITs so correlated? It's a good question and I don't know that I have the full answer. Part of it is that they have a lot of credit exposure. They often rent to businesses. And when the economy does poorly, businesses do poorly, stop being able to pay their rent, and REITs can't collect it. REITs are leveraged (I think? I forget they average REIT leverage. It's probably less than 5x like a typical 20% down homebuyer, but still,) leverage magnifies their exposure to the business cycle. This reminds me of the following post https://canvas.osam.com/Commentary/BlogPost?Permalink=climbing-the-maturity-wall-of-worry#:~:text=Sector%20Impacts%20Within%20the%20S%26P%20500%3A%20Real%20Estate%20as%20an%20Outlier which cites heavy use of short term debt as the reason why REITs have done poorly. Their financing costs have risen rapidly without a commensurate increase in income. Another reason is that they are publicly traded risk assets. In a crisis, all risk assets get highly correlated. That's because people want to raise cash and sell whatever they can and perceive risk wherever it might be found. In some cases that can lead to good deals for liquid buyers with clear eyes and heads. But that doesn't help you if you are someone who already owns some assets (in this case REITs) which are (perhaps) oversold to below intrinsic value. You want to be able to sell at a stable price, if needed, to sleep soundly. Included in the above reason is increasingly diversified and algorithmic portfolio management. People buy (and sell) everything without much discrimination because of EMH and low costs and such. And that's all rational individually, but it has the effect of raising correlations across various assets than you might not think of as very related. Going back to your most recent question, what I personally recommend for your portfolio. I recommend indexes! 2.9% REITs! Such wow very snore! And if you live near a low capital area, maybe look into physical real estate.

Mentions:#VTI#DCF#REIT
r/stocksSee Comment

1. I own Google already 2. Valuation should reflect its very high ROI/ROA (highest of any tech company in the entire NYSE), ability to generate revenue/profits with very few employees (rev/employee on par with Google), historically higher margins than peers. Right now things are temporarily depressed so you have to look out a bit farther. 3. Unlike Mag 7 stocks, UI could easily double/triple its earnings by continuing to deliver products better than its peers (which its popularity seems to suggest is the case). 4. I presented a fairly conservative DCF showing pretty substantial upside. If I take the exit multiple to 13, then sure it's 'fairly valued' with a 15% IRR.

Mentions:#ROI#DCF
r/optionsSee Comment

My strategy excludes stocks trading at premiums to their DCF value. Sure I am missing chasing ‘hot’ stocks with high IV’s but I want downside protection and a big way of getting that is to start with stocks that are trading at or below their ‘fair value’. Which begs the question what do you do with overvalued stocks. I stick to the mantra that irrational bettors can stay irrational longer than you can stay in the trade. I’ll do bear trades but I really need a catalyst in sight that will trash the stock and those catalysts tend to come as surprises. Give me momentum and I’ll take it but not without. So I infrequently find myself in a situation where I would consider a roll just to cut a loss. Often it is better just to take your loss and find a better trade. Recently I did a roll to keep from getting called out where the time value was less than the dividend. I’ll also roll on a covered call that is running out of extrinsic value if I want to keep writing on the underlying. I’ve rolled on spreads and shorts but it’s always A) is the hypothesis still valid B) Is this as good a trade as a different idea C) Is this just a market overreaction. For example a competitor has a bad quarter but nothing suggests it applies to your position, it’s just the market lumps it all together until they figure it out a couple of weeks later. Or it could be any one of a dozen ‘minor market panics’ that last a day or two and get forgotten.

Mentions:#DCF