Hello all,

I am trying to learn more about discounted cash flow (DCF) modelling as a way to calculate company intrinsic value. So far I have set up a spreadsheet which seems to return sensible numbers.

My question is: should I include current cash on hand and debt into the calculation? E.g. calculate the discounted free cash flows, add the current "cash and cash equivalents" and subtract the debt?

There are some companies that I like the look of where the cash flow isn't so strong but they have huge amount of cash on the balance sheet (and little to no debt). If one was buying the company it seems reasonable that this cash would be considered, you wouldn't sell a company for less than the cash that the business has.

I've searched a bit online and can't find a concrete answers, seems like the majority don't include current cash and debt in the DCF calculation, although a few do.

Cheers

There's more to life than Meme stocks, like actually making money

Qualigen Therapeutics, I would assume 75% of you basement dwellers know what it is, well, yeah, its popping. It's popping huge.

It's a legit company fighting cancer but unlike many other small pharma companies this one actually already have a selling product. The valuation is based on discounted cash flow model that takes into account current and potential future revenues from the current selling product only. Get in losers, we're going to Mars

Here are some simple screenshot to help you understand and easily gain insight.

https://www.qualigeninc.com/

Potential future revenues from medical products for adult and pediatric patients with rare cancers are NOT included in the model. Only current selling product FastPack® IP.

Therapeutics pipeline includes cancer drug compounds such as QN-247 (formerly referred to as AS1411-GNP or ALAN), and RAS-F, as well as STARS, a DNA/RNA-based treatment device

Hi guys, I am curious to know your approach to value a company.
Do you you use a classic discounted cash flow valuation using FCFF or FCFE and WACC as discount rate or your own expected return(12/15%)?
What do you use as Margin of Safety?

Have you read Rule 1 investing books form Phil Town?What do you think about his method? Too simplistic?

I am looking for a place to start learning DCF valuations. I have the excel skills and knowledge of financial statements etc.. So where is a good starting point? Is there a book you’d recommend? A website or anything!? Where can I learn how to perform a DCF valuation?

Hello to 0x community!

With the new tokenomics introduced, we at Sigil / TopMonks decided to take a deeper look at the economics of staking. We attempted to model a "fair price" of ZRX based on the discounted cash flow model (where discount = DSR of 6 % p.a.). We find that given the assumptions (described in the article), ZRX is currently quite overvalued (~50x). We also try to explain why the discrepancy between actual market price and price based on DCF - obviously other factors are propping up the market price.

You can check the analysis here: https://sigilfund.com/research/zrx-token-model-price-and-value/

Hi all. I am trying to learn financial modelling and making a DCF model for Intel along with a sensitivity analysis table (with terminal multiple and discount rate). I am calculating valuation by adding the PV of multiple cash flows to the terminal value of the company. Should these cash flow values be equal to the dividend payout of Intel? Or the FCF? I am going to attach my Excel if anyone wants to look at it.

ValuationsCopy.xlsx (I am not sure if this link will work)

#Sorrento Therapeutics

##Valuation and Discounted Cash Flow Model

Sector: Biotech

Market Cap: $570 million

Share Price: $7.05

To view the article with diagrams and discounted cash flow model, click here.

##Overview

Sorrento Therapeutics (SRNE) has had a monstrous run over the past several months, returning over 450% from it's lows in September. As a value oriented investor, I typically shy away from stocks making such a massive move in a short period of time. However, after H.C. Wainwright released a note stating they had a $38 price target on the stock, I decided to start from scratch and construct a model to determine a value for myself.

##ZTildo Sales Projections

Earlier last week, Sorrento received approval for their pain relief patch, Ztildo. This takes aim at Endo Pharmaceutical's Lipoderm patch, an opioid based pain relief patch that brings in over $1.1b in annual sales. Based on drug sales data (chart below), we can see that Endo sells approximately 5.4+ million patches annually (~1.35m quarterly x 4 = 5.4m), at a price of $250 - 265 per patch. While this information is a bit dated, it serves it's purpose in estimating unit sales.

Ztildo offers an improved, non-opioid, formulation that is anticipated to take market share from Endo over the course of the next 7 years, with analysts (including Wainwright) projecting $1.1 billion in peak sales come 2025. In my model, I assume the same average sale price of Lipoderm, at $250/patch, and 30% market share, typical of a "second to market" product, yielding an estimated $405 million in peak annual sales.

While a new and improved product can be exciting for investors, it's important to remember that Lipoderm is a trade and true treatment, being on the market since 1999. Additionally, with Lipoderm having gone generic, there will be pressure on Sorrento as insurers decide whether or not they will cover their product. These concerns are addressed through conservative unit pricing and market share figures, and I also excluded unit sales of generic Lipoderm in the model, anticipating market share will be taken exclusively from those still taking non-generic Lipoderm.

Ztildo's utility to Sorrento will not be to generate cash for investors, but instead to subsidize their riskier clinical stage assets. In doing so,

I just got into my first finance class and these terms are throwing me for a loop. As an "exercise" my professor is asking us to value a random company using a DCF and public comps...maybe I should put this in the ELI5 subreddit, but I thought I would test my luck here first. Anyone have any suggestions on where to begin? Or where I can find some examples? Any and all help is appreciated.

Hello, gentlemen.

I've been reading the 6th edition of Security Analysis and I'm still at the part in which Ben discusses the analysis of fixed-income securities, bonds. I liked how he makes sense of something it's better to invest in junior high-yield bonds if it's possible to investigate that the company is able to pay its dividends referring to its cash flow report. Can someone give me an example of this era's companies/industries referring to its cash flow data?

Thank you, it should make his ideas clearer in my mind using today's market.

I'm reading the Long and Short of it, by John Kay (not the NZ Prime Minister). I'm hoping you can help me understand discounted cash flow valuation because Kay's explanation in his book doesn't. :( I've tried Google but the explanations I've found are even more confusing than those in the book.

I understand that a dollar today isn't worth a dollar a year from now; so I'm not starting from zero knowledge base.

I'm just going to copy/paste a passage from the book. I'm not sure how much context someone familiar with these things would need, please let me know if you need some more.

Suppose a company, such as Exxon, is paying a dividend of $2.88 a share. We need to estimate the likely growth of that dividend. If dividends grow at 5 per cent, next year's dividend might be $3.02, rising to $3.17 the year after and so on. All we need to do is write down that stream of cash flows, discount it at, say, 8 per cent, [I don't know why he does this - OP] *and we can calculate the fundamental value.

If 5 per cent growth is the long-term average, there is a simplifying trick. Subtract 5 per cent, the growth rate, from 8 per cent, the discount rate.* [What is this discount rate?] The difference, 3 per cent, should be the dividend yield on the share, as in this case it more or less is (3.2 per cent). It is easy to work through the mathematics, but you may prefer just to believe the result. The fundamental value that emerges from this calculation is $96, close to the current share price.*

Now that I go over it and as I put this post together, I realise that the point that I'm getting unstuck on is the discount rate. What's that? It can't be for inflation because he would mention if he was including such a high inflation rate. He's assuming 5 per cent growth in dividends by just pulling it out of thin air, just to illustrate his point (I think). But what is this discount rate? Earlier, he uses "discount rate" to illustrate how a year from now, $108 would be worth $100 right now, assuming that the $100 is compounding at 8% (and that $117 two years from now would be worth the same).

But I still don't get it. I'm sitting here looking at those same two paragraphs over and over, but still don't get it. And I get the feeling that it's just some small logical leap that isn't immediately obvious to me.

And like I said, I'm not sure what other context someone familiar with these things would need, please let me know if there's something I've left out from the preceding par

Hey guys, so I'm working on a Monte Carlo simulation for the present value of cash flows for a single asset (an office property), that I previously modeled in excel.

My question is, do you guys know of any good resources for financial modeling in Python that value a SINGLE asset? I want to use it for companies and commercial real estate properties. I have looked at Yves Hilpisch 2014 "Python for Finance" book but the focus of the material is on macro financial modeling, derivatives and stock price movement...not what I am trying to do.

I have made a decent model so far and I know the basics of cash flow valuation but would like some guidance on the best way to do this in Python. Some of the questions I have are, should I make a series of classes and make instantiations from various classes or should I create a bunch of functions? I assume I should use pandas for this? Should I just kind of chug along and sketch it out until I figure it out? I'm thinking the latter, but some guidance or resources would help.

Thanks. (Yes, I know I can do this in excel and it would work just fine but I am looking to expand on my excel work with more efficient modeling).

Hi /r/StockMarket!

This Sunday evening, 6/21/2020 at 7PM ET in the Official /r/StockMarket Discord channel we'll be doing a livestream on a very popular subject: how to value a company using discounted cash flow analysis!

This is one of the most popular ways to value a company and determine what it's actually worth, by projecting its future cashflows and discounting them back to present value. During the stream we'll do this step by step with a real company using their real financial statements so you can see how it's done and ask questions.

As always I'll share my screen, stream it live on Twitch in the #twitch_stream channel and record it and upload it to YouTube afterwards as well as share it in the #archived_streams channel in case you can't make it.

Here are the details and relevant links:

DATE: Sunday, 6/21/2020 (this weekend!)

TIME: 7PM Eastern sharp!

LOCATION: Official /r/StockMarket Discord - Live Chat Channel

Note: If the above link doesn't go directly to the channel, click here to go to the main Discord server and look for the "#live_chat" channel under "Weekly Analysis Chat". The Twitch stream will be in the #twitch_stream channel or accessible directly via this link. You can also visit the YouTube Archive to watch all our past streams.

See you all Sunday evening at 7PM ET sharp!

I’ve been searching for the best method/model to understand/predict the future intrinsic value of a company, and ultimately forecast a stock price. The best method That seems to work for me is the discounted free cash flow model, and the best method comes from this guy :

The popular Investor- discounted free cash flow model

The video is quite long, but he does a great job explaining it.

Would you agree that this model is comprehensive enough? If not, can you recommended an alternative- maybe a completely different solution?

So I did a ton of research and decided to do an example to see how it worked out, and I did Disney. I did all the work and checked it and everything and my intrinsic value came out to like $320 dollars per share, which surely can't be correct? So I can only assume that the website I went to had wrong info somewhere. It is possible because they did have some really sloppy errors that I noticed.

So what I'm asking is does anyone have a way to calculate this? Or alternatively, is it actually possible that the intrinsic value per share of Disney could be that high?

Hi guys,

After last week's python coding livestream for /r/StockMarket got a really nice response in this sub I thought yall might be interested in joining in for this week's stream as well - this week we're doing it on how to value a company using discounted cash flow analysis. As always it's completely free and open to everyone so feel free to stop by!

Here's the link w/ some more info: https://www.reddit.com/r/StockMarket/comments/hcnroc/livestream_this_sunday_6212020_at_7pm_eastern_in/

Hope to see some of you there!

Cheers

Hi PH Investors,

I am curious to know if anyone is using DCF method in assessing a stock. Care to share how you do it? Do you have any materials, youtube or site that I can visit to know more about it and hopefully an average person like me(no finance background) would understand.

I would like to have a systematic approach in picking stocks and not base it on what is trending and hot.

Thanks.

Can anyone recommend some good resources to learn discounted cash flow valuation and highlight their experiences using this method in investing.

Hello to 0x community!

With the new tokenomics introduced, we at Sigil / TopMonks decided to take a deeper look at the economics of staking. We attempted to model a "fair price" of ZRX based on the discounted cash flow model (where discount = DSR of 6 % p.a.). We find that given the assumptions (described in the article), ZRX is currently quite overvalued (~50x). We also try to explain why the discrepancy between actual market price and price based on DCF - obviously other factors are propping up the market price.

You can check the analysis here: https://sigilfund.com/research/zrx-token-model-price-and-value/