I feel investors should focus on under-the-radar stocks, considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises plummeting stocks that were once revered. I don't know where to go here out of devastation.
I love this video and really appreciate the explanation. It would be so awesome if you did a livestream and took five companies and repeated the process going through the steps. Maybe even a pay per view event 90 minute session. Anyway the one area that was confusing was the terminal value step. Everything else made sense based on data but was not sure how you come up with best estimate based on type of stock or space or industry the stock represents. How much goodwill or longevity comes into play or other factors. thank you.
I have been watching some videos and I was thinking about investing in bitcoin or forex , but still don't know where to start from, any recommendation?
Same here ,It's strange how people talk about all the profits, they've been making through trading of bitcoin, while am here not making any profit at all. Please can Someone put me through on the right path.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
This website is handy to calculate intrinsic value too: : www.buffettinvestors.com/?via=cooper (p.s. watch out, there are a lot of bad actors in the comment section below)
Are you wondering where the multiple 26.9 came from? Scrolling through the comments trying to find anyone to explain it. Here is the explanation. The CF multiple in the video is determined by dividing the current stock price, in the case of this video it was $154.30, by the cashflow price, $5.57. So 154.30/5.57. Now if you have pulled out your calculator, and done that equation, you will notice that the variable you get is not 26.9, but rather 27.7. Why does the video say 26.9? We don't know. No one in the comments does and the video is 6 months old, so you will likely not recieve a response to this question. But now you have the answer to how you get the CashFlow multiple, so you can start calculating intrinsic value with that helpful spread sheet. God bless!
It's probably just a lag in the editing of the video. If you reverse the formula --> 26.9 x $5.57 = stock price = $149.83 So pretty close to the $154.30
That point about why you use cash flow instead of earnings is great. Earnings can be easily manipulated and are an accounting based metric that doesn’t always reflect underlying business reality. Cash flow on the other hand, doesn’t lie
If you want to go a bit more in depth with a DCF, the way Buffett actually calculates intrinsic value is actually net income + Depreciation and Amortisation + change in deferred tax- maintenance capital expenditure + change in working capital. That provides a much clearer indication of forecasted cash flows available to an investor
I have been watching some videos and I was thinking about investing in bitcoin or forex , but still don't know where to start from, any recommendation?
Same here ,It's strange how people talk about all the profits, they've been making through trading of bitcoin, while am here not making any profit at all. Please can Someone put me through on the right path.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
Fantastic and very clear video on how to determine the intrinsic value of a stock and thank legend for providing the us with spreadsheet, can't thank you enough!! 🙏🙏
HelloRaMz3, it seems you understood this video very well. Maybe you can help me with a question: At 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
That's exactly where I'm going with it and do plan to compare value methods. I also know the business model is extremely important and must be in good shape. There is research to be done and I'm thinking about growth rates.
I don’t understand, I’m completely lost at how you came up with 8% for 0-5yrs and 6% 5-10yrs. How do you find these percentages? I was thinking 8.00%+8=16% but wasn’t sure after that I don’t even understand where the 6% came from😭 I’m horrible at math but I’m trying
earlier in the video he said that for the future you need to take 15% if the past was 20% as example so 3/4. the first 5 years = 8 so the 'second' 5 years is 8.2% * 0,75 = 6,15 = 6. i think that is why, im not sure but thats my thought of it
Hi. Love the Video! Can you please explain how you got the *20 multiplier for the Terminal Value? In the video you said that "apple's current cash flow multiple is 26.9" I am not sure where you found that 26.9% value?
Don't know if it's sarcasm but if it's real then here's the answer: FCF = Cash inflows from operations - Investment in fixed assets cash outflow. Now divide the market capitalization of company with FCF and you get the multiplier.
You are expressing FCF as a dollar figure. Everywhere I look, FCF is expressed as a percentage. How do we turn that percentage into a dollar figure like you have here. Or vice versa. Assuming I don't have access to the website you pulled this FCF figure from??
One question.... why do you use 11 instead of 10 when calculating the PV of the terminal value? Shouldn't that be based on the end of year 10? Great video and thank you very much for the excel link!
99 percent of Warren Buffett's thinking about possible investments "often" revolves around qualitative measures, not quantitative. Qualitative measures are important, but they are the easiest part for Warren.
Thanks for this video!! so clear and didactic !! encourages people to know that this is not that complex and that with dedication one can learn to invest conscientiously
Buffet don't just buy stocks like regular Joe like you and me. He buys companies and control the board and management, using other people's money and insurance premiums. That's where the bulk of his wealth comes from.
I think forex isn't for everyone though. And the learning curve will scare off lots of people. Bit I will say once you learn it you will be forever blessed
Mate, at 6:00 you multiplied by 20 as it is lower than the Cash Flow multiple of 26.9. Where did you get that figure of 26.9 from? I didn't see that 26.9 anywhere in the video.
I googled the same question and what I found is that, cash flow multiple is " current price/cash flow". So in this example (by the time I am commenting this), the current price of apple is $146.19 and CF is 5.57. So the multiple he is talking about is, 146.19/5.57= 26.22.
@@NikhilMBagde The stock price in his video is $154.30 and I can only assume that this is the value he would have used to calculate the CF Multiple. If so, the CF multiple is 27.70 (154.30/5.57). I'm not sure I'm convinced if this is the right answer.
Well the current multiple was 26.9 right? So in 10 years time it's likely to be lower. So that was an estimate. You could go with 15 if you want to be more conservative. It really depends on how pricey the market and company is, in the future.
@@thecooperacademy Wouldn't the curren cash flow multiple in the example be actually 154.3/5.57 = 27.7? I just want to understand were the value came from, 26.9 is not far from the ratio between current stock price and DCF free cash flow.
@@thecooperacademy where is the 26.9 multiple coming from? Watched this video over and over again trying to understand that. I've also seen it in the comments as a frequent question, but without answer. Can you help me out with that?
Hey Abdul, it seems you understood this video very well. Maybe you can help me with a question: 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
@@matthewmanucci by the way , Phill Town in his book Rule #1 suggests that we double the growth rate to find a future PE. However , If historically the number is lesser, he suggests we should stick to the lesser to be safe. Regardless, this is pretty much an assumption u need to ballpark. If u think the business should be growing very fast by the time u want to consider the future price, then give it a PE 25-20. If you think it will have a regular average growth , then 15 PE should be safe. And if it is a slow growing one, then stick with 10.
Just a beginner here, so apologies if this is a stupid question.... 1. How did you get Apple's current cashflow multiple of 26.9 @5m55s in your video? 2. Also, @ 4m21s in video, you came up w/ 8% for first 5yrs & 6% for second 5yrs. Are you just shooting conservatively @ 14%? ( instead of adding 8% for first 5yrs and 8.2% for second totaling 16.2% matching the 10yr total?)
I just don't get how you got the 8% and 6% for growth rates. I understand that you looked at the past growth rates but I don't see how you get 8% and 6% from 16% and 8%
Excellent video for any and all investors trying how to decipher if a stock is truly worth it! Personally, I also start off by analyzing the stocks industry as well whether it is growing or dying then zoom in further on high quality companies within the industry.. finally I work to determine the intrinsic value, again, great video 👏
Hey Blue Lion Finance, it seems you understood this video very well. Maybe you can help me with a question: At 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
your video made this simple to understand the process therefore you earned yourself a Like. I have a question how did you get 6% in the 10yr column? i see where you got the 8% at. Please explain
I understood it as he was taking the difference between year 10 year and 5 year. Then using a slightly lower number because free cash flow slows as the company matures.
So I also had this same question and reached a conclusion. This might be clear to all of you already, but he is just making assumptions. He is assuming that the last 5 year growth rate might continue. Then it might slow down to 6% for the following 5 years.
What metric do you use when you dont have a history or there is a negative cashflow as is often the case with new companies? Or is speculation your only option at that point
This is great. Exactly what I'm looking for. I will be using this information. Question: It seems like there are scanners or other resources that can identify value stocks, that are on sale?
You gotta figure it out yourself cause usually this number is not reported on financial sites. First you must decide what type of cash flow you wanna take into consideration: it might be operating cash flow, free cash flow or a more accurated number that is Owner Earnings. I will use the example in the video so to find free cash flow go into section "Cash flow Statement" in the latest annual report of the company. Once there, search for the voice "Operating Cashflow" and subtract from this number "Capital Expenditures" that you ll find in the section below "Cash flow from Investing". Once you've calculated free cash flow divided the market capitalization with this number and you ll get the Multiple.
The discounted terminal value is based on 11 years not 10 years. It should be $84.45 in this example by my calculations so the PV of AAPL is then $133.59, unless I've missed something
I downloaded the calculation template. I am going to use it thanks. I have been wrestling with creating my own template with little success. Got it now :) Cheers.
I like the video, but you did not show how the $77.77 terminal value was calculated. You also did not show the calculation for the Present Value (Stock).
Thanks for the video. How come you don't count in or mention a margin of safety? I see other investors and experts recommending and praising a solid margin of safety after calculating the intrinsic value, to give a buffer if you're wrong about the futute?
I have been investing in real estate for a while now and a lot of people talk about Cryptocurrency. Who else thinks this crypto trading is kinda easy but is way to nervous to start.
Thanks Cooper. This is really informative video on intrinsic value of a stock. Also, you shared the Excel to calculate intrinsic value easily. Keep doing the great videos like this. Much appreciated!!
Hello Ptadeep Malhotra, it seems you understood this video very well. Maybe you can help me with a question: At 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
Hi! Can you tell me the meaning of $76.77? After you put the discount rate, it shows $76.77, but no explanation for that number. I would be very happy, if you tell me. Thanks. :)
Successful people don't become that way overnight. What most people see at a glance-wealth, a great career, purpose-is the result of hard work and hustle over time.
Hi, there! I can't use the spreadsheet for intrinsic value. I asked for authorization on the sheet. Somehow nothing happened. Help me please! Thank you.
09:54 4 steps to caluatate the intrinsic: (1) find the current cash flow (2) determine the growth rate for this cash flow for 10 yrs (3) find the terminal value in 10 yrs time (4) find the discount rate for your cash flow (to discount them back to the present day)
Hey 02 MBA, it seems you understood this video very well. Maybe you can help me with a question: At 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
@@matthewmanucci that is the PE Ratio of Apple on the Date this Video was made. So he supposed the PE Ratio for the Apple Stock after 10 Years will be about 20.
Yes, this is all technically accurate imo. However, Better to be vaguely right, than precisely wrong. From a Berkshire annual meeting, Charlie Munger "Warren talks about these discounted cash flows, but I've never seen him do one" Warren, "Its true, if I would have to do a DCF, it's too close!"
Hello. I'm actually looking for a good trader that can help me trade and make good profit, I've been seeing so many recommendations but i don't think they're trusted. Please do you have any recommendation?
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
@@jenbrown5626 I have been seeing so many recommendations about Mitchell Bryan all over socal media trending, her strategy must be good for people to talk about her
@@kathycarole6330 I saw the recommendation but I didn't bother chatting her up I keep loosing teally i still don't understand how the forex market works tho
Wow, this is amazing. I have watched many different videos/tutorials before about intrinsic value calculation. This is by far the best explanation and very easy to use. Thank you!! If I may ask a question, I did this calculation for CVS and the current value of the stock is extremely undervalued. But, based on EPS calculations, it's not. Why is the valuation so different when using FCF vs EPS?
Hey jithu jithu, it seems you understood this video very well. Maybe you can help me with a question: At 5:51 he says: "I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9" Where is this info coming from? (The number 26.9) Thanks!
You should consider putting in the price as the present value of the stock, and backing out the implied discount rate (expected return). Use the 5 or 10 year FCF growth as fixed, as you can do that for every stock, so it is consistent. So at any point in time you can generate the returns on offer and pick the stocks with the best return from your buy rated companies list (a list of companies with predictable cashflows and earnings, which have robust balance sheets). The issue with this method though is that FCF can be all over the place at times. Owner earnings are probably a better metric to use instead of FCF. Especislly if you have checked the quality of earnings first.
The only thing I’m confused about is when he uses the 20, in the terminal value estimation. Where did he get 20 from? And is that an Accurate number to consistently rely on?
I feel investors should focus on under-the-radar stocks, considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises plummeting stocks that were once revered. I don't know where to go here out of devastation.
This video is amazing. Thank you for explaining intrinsic value that simple, other people really ain't able to explain what intrinsic value is.
I love this video and really appreciate the explanation. It would be so awesome if you did a livestream and took five companies and repeated the process going through the steps. Maybe even a pay per view event 90 minute session. Anyway the one area that was confusing was the terminal value step. Everything else made sense based on data but was not sure how you come up with best estimate based on type of stock or space or industry the stock represents. How much goodwill or longevity comes into play or other factors. thank you.
I have been watching some videos and I was thinking about investing in bitcoin or forex , but still don't know where to start from, any recommendation?
Same here ,It's strange how people talk about all the profits, they've been making through trading of bitcoin, while am here not making any profit at all. Please can Someone put me through on the right path.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
That's true most people today have been having a lot of failures in forex and crypto sector because of poor orientation or bad experts
You don't make money on forex or crypto by holding your coins rather you trade to make gains
I believe your view
This website is handy to calculate intrinsic value too: : www.buffettinvestors.com/?via=cooper
(p.s. watch out, there are a lot of bad actors in the comment section below)
Are you wondering where the multiple 26.9 came from? Scrolling through the comments trying to find anyone to explain it. Here is the explanation. The CF multiple in the video is determined by dividing the current stock price, in the case of this video it was $154.30, by the cashflow price, $5.57. So 154.30/5.57. Now if you have pulled out your calculator, and done that equation, you will notice that the variable you get is not 26.9, but rather 27.7. Why does the video say 26.9? We don't know. No one in the comments does and the video is 6 months old, so you will likely not recieve a response to this question. But now you have the answer to how you get the CashFlow multiple, so you can start calculating intrinsic value with that helpful spread sheet.
God bless!
It's probably just a lag in the editing of the video. If you reverse the formula --> 26.9 x $5.57 = stock price = $149.83
So pretty close to the $154.30
That point about why you use cash flow instead of earnings is great. Earnings can be easily manipulated and are an accounting based metric that doesn’t always reflect underlying business reality. Cash flow on the other hand, doesn’t lie
Did I miss this? Where did you get, or how did you calculate the 6-10 year 6% figure. I appreciate your feedback!
Thank you Investor Center. Congrats on the success of the channel!
I was being more conservative, as companies growth tends to decrease as time goes along.
@@thecooperacademy I appreciate that. Still have a long way to go to get to your level!
Literally what i needed to learn even more! Thank you!
If you want to go a bit more in depth with a DCF, the way Buffett actually calculates intrinsic value is actually net income + Depreciation and Amortisation + change in deferred tax- maintenance capital expenditure + change in working capital. That provides a much clearer indication of forecasted cash flows available to an investor
what does that mean if you dont mind me asking
Really enjoyed the video! How did you arrive at 8 and 6% for growth rates in the future? Also, where do you get the cashflow multiple?
I really love this video! such a great quality and a wonderful explanation!
I have been watching some videos and I was thinking about investing in bitcoin or forex , but still don't know where to start from, any recommendation?
Same here ,It's strange how people talk about all the profits, they've been making through trading of bitcoin, while am here not making any profit at all. Please can Someone put me through on the right path.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
That's true most people today have been having a lot of failures in forex and crypto sector because of poor orientation or bad experts
You don't make money on forex or crypto by holding your coins rather you trade to make gains
I believe your view
Fantastic and very clear video on how to determine the intrinsic value of a stock and thank legend for providing the us with spreadsheet, can't thank you enough!! 🙏🙏
HelloRaMz3, it seems you understood this video very well. Maybe you can help me with a question:
At 5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
This video is exactly why I follow this channel.
Thank you Andrew!
That's exactly where I'm going with it and do plan to compare value methods. I also know the business model is extremely important and must be in good shape. There is research to be done and I'm thinking about growth rates.
I don’t understand, I’m completely lost at how you came up with 8% for 0-5yrs and 6% 5-10yrs. How do you find these percentages? I was thinking 8.00%+8=16% but wasn’t sure after that I don’t even understand where the 6% came from😭 I’m horrible at math but I’m trying
Did you ever figure this out because I had the same question😀
earlier in the video he said that for the future you need to take 15% if the past was 20% as example so 3/4. the first 5 years = 8 so the 'second' 5 years is 8.2% * 0,75 = 6,15 = 6. i think that is why, im not sure but thats my thought of it
Hi how do i find the current cash flow multiple? You say apples was 26.9? Thanks in advance!
this is a extraordinary video and it is greatly appreciated! The content, might I add, you provide to the investing community is superb!
I appreciate that Tobio!
Hi. Love the Video! Can you please explain how you got the *20 multiplier for the Terminal Value? In the video you said that "apple's current cash flow multiple is 26.9" I am not sure where you found that 26.9% value?
I have the same question!
Don't know if it's sarcasm but if it's real then here's the answer:
FCF = Cash inflows from operations - Investment in fixed assets cash outflow.
Now divide the market capitalization of company with FCF and you get the multiplier.
You are expressing FCF as a dollar figure. Everywhere I look, FCF is expressed as a percentage. How do we turn that percentage into a dollar figure like you have here. Or vice versa. Assuming I don't have access to the website you pulled this FCF figure from??
One question.... why do you use 11 instead of 10 when calculating the PV of the terminal value? Shouldn't that be based on the end of year 10? Great video and thank you very much for the excel link!
thank you i was trying to find an error in my spreadsheet and thanks your XML i can find it and understand the reason i was wrong, great video
This video ison point i was able to confri. This method watching a warren bufet interview THIS IS REALLY GREAT STUFF MATE 🔥🔥🔥
99 percent of Warren Buffett's thinking about possible investments "often" revolves around qualitative measures, not quantitative. Qualitative measures are important, but they are the easiest part for Warren.
Thanks for this video!! so clear and didactic !! encourages people to know that this is not that complex and that with dedication one can learn to invest conscientiously
Cash flow is king 💰
Buffet don't just buy stocks like regular Joe like you and me. He buys companies and control the board and management, using other people's money and insurance premiums. That's where the bulk of his wealth comes from.
I really appreciate the video. This video is the best video on this subject
I think forex isn't for everyone though. And the learning curve will scare off lots of people. Bit I will say once you learn it you will be forever blessed
You're right ma thanks for introducing me to expert Louis Klate of financial education
People are scared of investing because of high rate of scam in the business
This video is about stocks. Not currency swaps 🤣
Mate, at 6:00 you multiplied by 20 as it is lower than the Cash Flow multiple of 26.9. Where did you get that figure of 26.9 from? I didn't see that 26.9 anywhere in the video.
I googled the same question and what I found is that, cash flow multiple is " current price/cash flow". So in this example (by the time I am commenting this), the current price of apple is $146.19 and CF is 5.57. So the multiple he is talking about is, 146.19/5.57= 26.22.
@@NikhilMBagde thank you I had the same question
@@NikhilMBagde The stock price in his video is $154.30 and I can only assume that this is the value he would have used to calculate the CF Multiple. If so, the CF multiple is 27.70 (154.30/5.57). I'm not sure I'm convinced if this is the right answer.
Thank you so much for sharing. I learned a lot from this video. Gonna try it out now. : )
How did you come up with multiple of 20? Is that just a random number after you hold it for 10 years?
Well the current multiple was 26.9 right? So in 10 years time it's likely to be lower. So that was an estimate. You could go with 15 if you want to be more conservative. It really depends on how pricey the market and company is, in the future.
@@thecooperacademy Wouldn't the curren cash flow multiple in the example be actually 154.3/5.57 = 27.7? I just want to understand were the value came from, 26.9 is not far from the ratio between current stock price and DCF free cash flow.
I also didn't understand where did we see 26.9 value? At 26.9 CF multiple, the current CF should be at 5.73 not 5.57. Correct ?
@@thecooperacademy where is the 26.9 multiple coming from? Watched this video over and over again trying to understand that. I've also seen it in the comments as a frequent question, but without answer. Can you help me out with that?
Great video mate. Really well summarised with excellent graphics to assist!
Best explanation I heard for the topic. Great job man ! Thanks heaps
Thank you Abdul. Appreciate it.
Hey Abdul, it seems you understood this video very well. Maybe you can help me with a question:
5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
@@matthewmanucci check this video. The guy presented a very clear and impressive formula
ruclips.net/video/ICiwzpQDGCI/видео.html
@@matthewmanucci by the way , Phill Town in his book Rule #1 suggests that we double the growth rate to find a future PE. However , If historically the number is lesser, he suggests we should stick to the lesser to be safe.
Regardless, this is pretty much an assumption u need to ballpark. If u think the business should be growing very fast by the time u want to consider the future price, then give it a PE 25-20. If you think it will have a regular average growth , then 15 PE should be safe. And if it is a slow growing one, then stick with 10.
@@aalhaidari Why is the terminal value (M7 on the google sheet) use 11 years instead of 10 to calculate the $76.77?
This video was well worth my time! Thank you for sharing
This video is amazing! God bless you man!
Thanks for this video. How did you determine that Apple's current cash flow multiple is 26.9? This is the only part that I did not understand.
Is it the PE ratio?
There are a lot I say to cook up time to be motivated ❤❤🎉🎉
Just a beginner here, so apologies if this is a stupid question....
1. How did you get Apple's current cashflow multiple of 26.9 @5m55s in your video?
2. Also, @ 4m21s in video, you came up w/ 8% for first 5yrs & 6% for second 5yrs. Are you just shooting conservatively @ 14%? ( instead of adding 8% for first 5yrs and 8.2% for second totaling 16.2% matching the 10yr total?)
This is what I wanna know😭😭
Thanks a lot, Mr Cooper. it was very useful.
This is a really good step by step simple present value calc. Apple’s growth is very low compared to some of it’s peers.
I just don't get how you got the 8% and 6% for growth rates. I understand that you looked at the past growth rates but I don't see how you get 8% and 6% from 16% and 8%
Excellent video for any and all investors trying how to decipher if a stock is truly worth it! Personally, I also start off by analyzing the stocks industry as well whether it is growing or dying then zoom in further on high quality companies within the industry.. finally I work to determine the intrinsic value, again, great video 👏
Hey Blue Lion Finance, it seems you understood this video very well. Maybe you can help me with a question:
At 5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
Where would you find the cash flow multiple in Guru Focus?
your video made this simple to understand the process therefore you earned yourself a Like. I have a question how did you get 6% in the 10yr column? i see where you got the 8% at. Please explain
I was about to ask the same question
Me question is absolutely the same, where they got the 8-6%?
where did he get the 8% from ?
I understood it as he was taking the difference between year 10 year and 5 year. Then using a slightly lower number because free cash flow slows as the company matures.
So I also had this same question and reached a conclusion. This might be clear to all of you already, but he is just making assumptions. He is assuming that the last 5 year growth rate might continue. Then it might slow down to 6% for the following 5 years.
Hey how did you get the 20x figure in regards to the stock for termination value?
Hey Cooper how do you find or calculate the "Current Cash Flow Multiple"?
Yeah, how do u find that figure?
Someone in the comments said take the current stock price / the cash flow ($5.57 example)
Great and practical instructions. I have a question though. What if the free cashflow in Column TTM is negative? Many thanks,
Thank you so much for this video. Very informative 💯💯
What metric do you use when you dont have a history or there is a negative cashflow as is often the case with new companies? Or is speculation your only option at that point
This is great. Exactly what I'm looking for. I will be using this information. Question: It seems like there are scanners or other resources that can identify value stocks, that are on sale?
May you please make a video on how to create this spread sheet.
Thanks alot this helped me out , hope you can upload more videos luke this :)
Great video!! I have a question. How can I know the multiple of the current cash flow?
You gotta figure it out yourself cause usually this number is not reported on financial sites. First you must decide what type of cash flow you wanna take into consideration: it might be operating cash flow, free cash flow or a more accurated number that is Owner Earnings. I will use the example in the video so to find free cash flow go into section "Cash flow Statement" in the latest annual report of the company. Once there, search for the voice "Operating Cashflow" and subtract from this number "Capital Expenditures" that you ll find in the section below "Cash flow from Investing". Once you've calculated free cash flow divided the market capitalization with this number and you ll get the Multiple.
The discounted terminal value is based on 11 years not 10 years. It should be $84.45 in this example by my calculations so the PV of AAPL is then $133.59, unless I've missed something
I downloaded the calculation template. I am going to use it thanks. I have been wrestling with creating my own template with little success. Got it now :) Cheers.
-📩📞I𝟹𝟻𝟸𝟼𝟻𝟾𝟹𝟼𝟺𝟶 ‘,,,,
And in case we don't have your spread sheet, what's the formula for intrinsic value?
Super video! Where did found that multiple of 20 used on Terminal Value cell? (Cell M6)
Why did we multiply by 20 at the terminal value ( Where from 20 or 26.9 called Multiplier) came from
Thank you very much for this video.
No worried Toni :)
I like the video, but you did not show how the $77.77 terminal value was calculated. You also did not show the calculation for the Present Value (Stock).
Thanks for the video. How come you don't count in or mention a margin of safety? I see other investors and experts recommending and praising a solid margin of safety after calculating the intrinsic value, to give a buffer if you're wrong about the futute?
Why are you choosing 10 years? Does the fair value change if you choose 20 or 30 years?
Keep them coming 👌🏻 thanks
I have been investing in real estate for a while now and a lot of people talk about Cryptocurrency. Who else thinks this crypto trading is kinda easy but is way to nervous to start.
In a few months or no time people we definitely be kicking themselves regret for missing the opportunity to buy or invest in cryptocurrency.
@@emilyava4505 I wanted to buy bitcoin and trade but I still can't grasp the entire concept.
You don't need any one to teach you on how to invest your coins. You can make research on your own and start doing it yourself
>@@margotrobbie9166
Glad I subscribed to your channel!
T̬̤̯ h̬̤̯ a̬̤̯ n̬̤̯ k̬̤̯ s̬̤̯ f̬̤̯ o̬̤̯ r̬̤̯ w̬̤̯ a̬̤̯ t̬̤̯ c̬̤̯ h̬̤̯ i̬̤̯ n̬̤̯ g̬̤̯ f̬̤̯ o̬̤̯ r̬̤̯ m̬̤̯ o̬̤̯ r̬̤̯ e̬̤̯ g̬̤̯ u̬̤̯ i̬̤̯ d̬̤̯ a̬̤̯ n̬̤̯ c̬̤̯ e̬̤̯ a̬̤̯ n̬̤̯ d̬̤̯ f̬̤̯ i̬̤̯ n̬̤̯ a̬̤̯ n̬̤̯ c̬̤̯ i̬̤̯ a̬̤̯ l̬̤̯ o̬̤̯ p̬̤̯ p̬̤̯ o̬̤̯ r̬̤̯ t̬̤̯ u̬̤̯ n̬̤̯ i̬̤̯ t̬̤̯ i̬̤̯ e̬̤̯ s̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ *̬̤̯ •̬̤̯ w̬̤̯ •̬̤̯ h̬̤̯ •̬̤̯ a̬̤̯ •̬̤̯ t̬̤̯ •̬̤̯ s̬̤̯ •̬̤̯ a̬̤̯ •̬̤̯ p̬̤̯ •̬̤̯ p̬̤̯ *̬̤̯ o̬̤̯ n̬̤̯
*̬̤̯ {̬̤̯
Glad to have you subscribed!
Thanks Cooper. This is really informative video on intrinsic value of a stock. Also, you shared the Excel to calculate intrinsic value easily. Keep doing the great videos like this. Much appreciated!!
Hello Ptadeep Malhotra, it seems you understood this video very well. Maybe you can help me with a question:
At 5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
Hi! Can you tell me the meaning of $76.77? After you put the discount rate, it shows $76.77, but no explanation for that number. I would be very happy, if you tell me. Thanks. :)
Hi Jun. Basically even the terminal value must be discounted to the present. After have multiplied 10.95 * 20, calculate this: 219/(1.10)^11 = 76.77
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I totally agree with you
I have been trading offshore. I'm yet to make my first $5000, any recommendable expert to trade with?
Rather get an expert to trade with giving you the required mentorship for a successful profit outcome.
piece of advice
But I learnt the hard way, blowing over $3,000 account side trading with no mentor or expert
I am new to trading and my presumptions is that I will be needing an expert as you would lose all your capital and you drop off the market
Hi, there! I can't use the spreadsheet for intrinsic value. I asked for authorization on the sheet. Somehow nothing happened. Help me please! Thank you.
why do you discount the terminal value with 11 if the valuation is for 10 years projection?
09:54
4 steps to caluatate the intrinsic:
(1) find the current cash flow
(2) determine the growth rate for this cash flow for 10 yrs
(3) find the terminal value in 10 yrs time
(4) find the discount rate for your cash flow (to discount them back to the present day)
Hey 02 MBA, it seems you understood this video very well. Maybe you can help me with a question:
At 5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
@@matthewmanucci that is the PE Ratio of Apple on the Date this Video was made.
So he supposed the PE Ratio for the Apple Stock after 10 Years will be about 20.
First, thank you so much for this video and insights. But how this intrinsic model is different than the DCF?
Yes, this is all technically accurate imo.
However,
Better to be vaguely right, than precisely wrong.
From a Berkshire annual meeting,
Charlie Munger
"Warren talks about these discounted cash flows, but I've never seen him do one"
Warren,
"Its true, if I would have to do a DCF, it's too close!"
Well done 👏 great vdo
Hello. I'm actually looking for a good trader that can help me trade and make good profit, I've been seeing so many recommendations but i don't think they're trusted. Please do you have any recommendation?
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
That's true most people today have been having a lot of failures in forex and crypto sector because of poor orientation and bad experts
@@jenbrown5626 I have been seeing so many recommendations about Mitchell Bryan all over socal media trending, her strategy must be good for people to talk about her
I did invest with her and I made huge profits
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This video is great. Thumps up !
Wow, this is amazing. I have watched many different videos/tutorials before about intrinsic value calculation. This is by far the best explanation and very easy to use. Thank you!!
If I may ask a question, I did this calculation for CVS and the current value of the stock is extremely undervalued. But, based on EPS calculations, it's not. Why is the valuation so different when using FCF vs EPS?
eps can be highly manipulated, like paying a 1 time debt or fine, or acquisitions. FCF will be better
Hey jithu jithu, it seems you understood this video very well. Maybe you can help me with a question:
At 5:51 he says:
"I've decided to use a multiple of 20 because that is lower and more conservative than Apple's current cashflow multiple of 26.9"
Where is this info coming from? (The number 26.9)
Thanks!
How did the Terminal Value change from $219 to $76 after put a discount rate of 10%. Whats the equation behind that calculation?
These skills should be taught in high school to our kids.
then kids will think how to make easy money just by investing in stock markets. we need people with skils that are useful for society.
Great expectation
You should consider putting in the price as the present value of the stock, and backing out the implied discount rate (expected return). Use the 5 or 10 year FCF growth as fixed, as you can do that for every stock, so it is consistent. So at any point in time you can generate the returns on offer and pick the stocks with the best return from your buy rated companies list (a list of companies with predictable cashflows and earnings, which have robust balance sheets). The issue with this method though is that FCF can be all over the place at times. Owner earnings are probably a better metric to use instead of FCF. Especislly if you have checked the quality of earnings first.
T̬̤̯ h̬̤̯ a̬̤̯ n̬̤̯ k̬̤̯ s̬̤̯ f̬̤̯ o̬̤̯ r̬̤̯ w̬̤̯ a̬̤̯ t̬̤̯ c̬̤̯ h̬̤̯ i̬̤̯ n̬̤̯ g̬̤̯ f̬̤̯ o̬̤̯ r̬̤̯ m̬̤̯ o̬̤̯ r̬̤̯ e̬̤̯ g̬̤̯ u̬̤̯ i̬̤̯ d̬̤̯ a̬̤̯ n̬̤̯ c̬̤̯ e̬̤̯ a̬̤̯ n̬̤̯ d̬̤̯ f̬̤̯ i̬̤̯ n̬̤̯ a̬̤̯ n̬̤̯ c̬̤̯ i̬̤̯ a̬̤̯ l̬̤̯ o̬̤̯ p̬̤̯ p̬̤̯ o̬̤̯ r̬̤̯ t̬̤̯ u̬̤̯ n̬̤̯ i̬̤̯ t̬̤̯ i̬̤̯ e̬̤̯ s̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ ?̬̤̯ *̬̤̯ •̬̤̯ w̬̤̯ •̬̤̯ h̬̤̯ •̬̤̯ a̬̤̯ •̬̤̯ t̬̤̯ •̬̤̯ s̬̤̯ •̬̤̯ a̬̤̯ •̬̤̯ p̬̤̯ •̬̤̯ p̬̤̯ *̬̤̯ o̬̤̯ n̬̤̯
*̬̤̯ {̬̤̯
Could u make a video on the method you’re talking about? Or what’s your social media, I’d like to dm you for more info on this method
Greatly appreciated!
Wow this is amazing. Thank you so much for explaining intrinsic value calculations in plain English
what is if the Growth rate for example is the groth rate for xiaomi for the 1, 5, 10 years N/A ?
Nice ⭐can you do as of yet non profitable, and if trading is worth it or vs hold..just throwing some topics out there. TY
Best video ever
Excellent!
Why is the present value of the terminal value calculated using 11 periods (years)? Shouldn't it be 10 years?
what is that cash flow multiplier ?
apple Current cash flow multiplier is 26.9 so i'll choose 20.
Where did that 26.9 come from ?
Great video
Thank you!
Would you kindly do another one of these very illustrative tutorials but on the business model of XYz stock ?
what is the multiple? why do we choose one?
Hey, where is the spreadsheet you mention? I cannot find it. Not certain how you came up with the figures you came up with on row 7 (B7 through K7)
Why are you not using a terminal growth rate % instead of a selling multiple..
The only thing I’m confused about is when he uses the 20, in the terminal value estimation. Where did he get 20 from? And is that an Accurate number to consistently rely on?
I've tried to use it, however it's "view only" document. Is it just me ?
Looking at WEB the cashflow growth rates are N/A. How do you calculate it when it reads NA?
so is the price that comes out the price i should buy at