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 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
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.
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
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.
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
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
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??
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
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?
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!
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!
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.
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!
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.
how do u calculate Growth Rate? how do you come up with this 1.08 number? Will be appreciated if you could share me the formula on Growth Rate and Discount rate. I tried search for the formula in youtube and google, but cant find it.
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!
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.
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.
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.
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.
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
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.
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.
There is a bunch of ways. You can find the 10 year interest rate and then add a risk premium to that. Some investors determine the WACC (which i think is stupid). However I just like to use 10% as that's the return I want on a stock. The most important thing with discount rate is to be consistent & use the same variable each time. That way you can compare the stocks you analyse equally & find the 'best' opportunity.
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?
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%
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?)
Here's the answer: Free Cash flow (FCF) is the figure you get after making suitable deductions for capital expenditure to the net profit. You get these figures from the Cash Flow Statement. 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.
Thank you for this great video. I do wonder how you come up with a cashflow multiple of 26,9 and downgrade it to 20. Could you please explain that? Thank you.
What I found on Google: Cash Flow Multiple = 1/(k-g) Where k = discount rate or cost of capital and g = cash flow growth rate Cash Flow Multiple -- Apple Example k = 10% or 0.01 g = 6% or 0.06 (for the last 5 years) CFM = 1/(0.01-0.06) = 25 If k = 10% and g = 5% then you'd get CFM = 1/(0.10-0.05) = 20 Hope this helps
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.
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. :)
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?
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 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.
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)
I really love this video! such a great quality and a wonderful explanation!
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
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.
Literally what i needed to learn even more! Thank you!
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!
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.
Great video mate. Really well summarised with excellent graphics to assist!
This video was well worth my time! Thank you for sharing
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
For More Insights&Guidance 👆👆..,,,
Thank you so much for sharing. I learned a lot from this video. Gonna try it out now. : )
For More Insights&Guidance 👆👆..,,,…
Thank you so much for this video. Very informative 💯💯
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
I really appreciate the video. This video is the best video on this subject
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??
Keep them coming 👌🏻 thanks
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
Hi how do i find the current cash flow multiple? You say apples was 26.9? Thanks in advance!
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
what is if the Growth rate for example is the groth rate for xiaomi for the 1, 5, 10 years N/A ?
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?
could you explain the multiples part as im still not sure how do i find multiples of a stock do i google it or is there a formula
This video is amazing! God bless you man!
👆📩
Greatly appreciated!
Thanks alot this helped me out , hope you can upload more videos luke this :)
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!
Thanks a lot, Mr Cooper. it was very useful.
This video ison point i was able to confri. This method watching a warren bufet interview THIS IS REALLY GREAT STUFF MATE 🔥🔥🔥
Where would you find the cash flow multiple in Guru Focus?
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.
For More Insights&Guidance 👆👆..,,,…
This video is exactly why I follow this channel.
Thank you Andrew!
For More Insights&Guidance 👆👆..,,,
Looking at WEB the cashflow growth rates are N/A. How do you calculate it when it reads NA?
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!! 🙏🙏
For More Insights&Guidance 👆👆..,,,….
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!
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?
From where did you get the 20 that u used it to find the Terminal Value?
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
czcams.com/video/ICiwzpQDGCI/video.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?
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)
Is there a way to download and edit this excel table please?
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!
This video is great. Thumps up !
For More Insights&Guidance 👆👆..,,,…
Excellent!
Where do I go to download the spreed sheet ?
Well done 👏 great vdo
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 ‘,,,,
how do u calculate Growth Rate? how do you come up with this 1.08 number? Will be appreciated if you could share me the formula on Growth Rate and Discount rate. I tried search for the formula in youtube and google, but cant find it.
Thank you very much for this video.
No worried Toni :)
For More Insights&Guidance 👆👆..,,,….
Thanku so much
Hey how did you get the 20x figure in regards to the stock for termination value?
👆📩
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!
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!
Bro how did you find the cash flow multiple of apple?
Best video ever
Great video thanks
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
*̬̤̯ {̬̤̯
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
Super video! Where did found that multiple of 20 used on Terminal Value cell? (Cell M6)
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.
For More Insights&Guidance 👆👆..,,,…
Where is the spreadsheet wanted to download
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.
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.
how do u know what the cashflow mutiple of a company is?
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
👆📩
Cash flow is king 💰
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Great and practical instructions. I have a question though. What if the free cashflow in Column TTM is negative? Many thanks,
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)
How did you determine "the Present Value (Stock)"
First, thank you so much for this video and insights. But how this intrinsic model is different than the DCF?
Thank you!
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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
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.
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How do you all determine your appropriate discount rate?
There is a bunch of ways. You can find the 10 year interest rate and then add a risk premium to that. Some investors determine the WACC (which i think is stupid). However I just like to use 10% as that's the return I want on a stock. The most important thing with discount rate is to be consistent & use the same variable each time. That way you can compare the stocks you analyse equally & find the 'best' opportunity.
Great video
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?
Also how did you find the cash flow multiple
Could you please explain how we determine the terminal value?
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%
can you suggest any alternative to gurufocus ?
why do you discount the terminal value with 11 if the valuation is for 10 years projection?
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May you please make a video on how to create this spread sheet.
Is there a formula that does what the spreadsheet does?
Nice video, I am up £12 k this month in my portfolio and I'm happy
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😭😭
Would you kindly do another one of these very illustrative tutorials but on the business model of XYz stock ?
How did the Terminal Value change from $219 to $76 after put a discount rate of 10%. Whats the equation behind that calculation?
How did you get Present Value (yearly)?
How do you find the free cash flow multiple and what exactly is it?
Here's the answer:
Free Cash flow (FCF) is the figure you get after making suitable deductions for capital expenditure to the net profit. You get these figures from the Cash Flow Statement.
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.
can someone explain me how did he find the cash-flow multiple? thanks
Everyone is asking this. No one seems to be answering it. :(
Thank you for this great video. I do wonder how you come up with a cashflow multiple of 26,9 and downgrade it to 20. Could you please explain that? Thank you.
I've been asking everyone here the same question. Let me know if you figure it out because it's kind of a big deal for this formula to work.
What I found on Google:
Cash Flow Multiple = 1/(k-g)
Where k = discount rate or cost of capital
and g = cash flow growth rate
Cash Flow Multiple -- Apple Example
k = 10% or 0.01
g = 6% or 0.06 (for the last 5 years)
CFM = 1/(0.01-0.06) = 25
If k = 10% and g = 5% then you'd get CFM = 1/(0.10-0.05) = 20
Hope this helps
@@johngomez7118 Thanks!!!😀
I am wondering how he came up with apple current cash flow multiple being 26.9?
Great expectation
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So we don't consider the equity and margin of safety right ?
Wow this is amazing. Thank you so much for explaining intrinsic value calculations in plain English
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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.
Why did we multiply by 20 at the terminal value ( Where from 20 or 26.9 called Multiplier) came from
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I've tried to use it, however it's "view only" document. Is it just me ?
How come about 5.57 dollars as apple cash flow? I need to know how to calculate that.
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
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?
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
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