DCF Valuation

จำนวนเข้าชม 557
An indicator that can be used to study Discounted Cash Flow Valuation for stocks.

When the reported Free Cash Flow for a company is non-positive the line turns gray. Red color means the market price is higher than the valuation whereas green color means the market price is below the valuation and it might be a good opportunity for value traders.

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hi can explain whats mean of this value? like expectedGrowthRate=input(0.10)
+1 ตอบกลับ
ekrem6nel hongsick
@hongsick, Hi, these are the inputs to calculate the value of a stock based on the DCF method.
- expectedGrowthRate: this is the expectation for the average annual growth rate for the cash flow of the company. This is generally considered to be around the market average. Some people use the average yield of the index the stock is a part of.
- marginOfSafety : this is used to calculate a conservative growth rate, hence reduces the possibility of buying stocks at expensive prices. (for example Warren Buffet and other value investors use a 25% safety margin)
- growthDeclineRate : this is here because we assume the expectedGrowthRate will not be sustainable and that every year it will be diminished by a certain percentage (like 5% per year)
- discountRate : this is the expected interest rate(for a savings accouont) for the next decade. This is used to calculate the present value of the calculated future value of the stock.
- year10FCFMultiplier: this is used to calculate the terminal value which is a part of the DCF calculation. In short, this is used to calculate the liquidation value for the company after 10 years.
hongsick ekrem6nel
@ekrem6nel, got it, learn more, thx a lot 👍
hongsick ekrem6nel
@ekrem6nel, why will appear Free Cash Flow for a company is non-positive the line turns gray?