In fact, it’s one of the best tools out there that relies on a “reverse logic” mental model. Any DCF can be turned into a reverse DCF > it’s just a matter of adjusting the growth assumptions, discount rate, and so on.
DCF doesn't always match market prices in the short term - but over time, fundamentals tend to win. It's a powerful tool to estimate intrinsic value, especially when assumptions are reasonable.
That said, it's just one lens > market sentiment, momentum, and risk perception also play key roles...
Hey Jimmy, can u please share the template thanks
Hi, Hari! Just sent it to you via DM - please take a look.
Hello Jimmy
Thank you so much for this, can you please kindly share the template
Thanks.
Hello, Njabulo!
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Love the DCF breakdown! Wish my senior guided me like you do back then.
Thanks so much, DN!!! I really appreciate it - glad I can help along the way
Hello,
can you please share the template.
Thanks
Hi, Pascal!!!
Just sent to you via DM. Thanks!
Reverse DCF also a great tool in understanding what the market is pricing in for FCF growth. Great spot test.
Absolutely, Caleb!!!
In fact, it’s one of the best tools out there that relies on a “reverse logic” mental model. Any DCF can be turned into a reverse DCF > it’s just a matter of adjusting the growth assumptions, discount rate, and so on.
In your opinion: Does DCF method align to the security price over a period in the majority of the cases?
Or is it only one more stone to be unturned in stock valuation.
DCF doesn't always match market prices in the short term - but over time, fundamentals tend to win. It's a powerful tool to estimate intrinsic value, especially when assumptions are reasonable.
That said, it's just one lens > market sentiment, momentum, and risk perception also play key roles...
Referring to:
The difference reflects the equity risk premium - the extra return expected in exchange for higher uncertainty.
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My opinion:
Then, the DCF is an Expected Return of the Market Sentiments, not the Actual Intrinsic Value of the Business.
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Munger said he has never seen Buffett calculate DCF.