Jae,
Firstly great tool, I love it. Now I need to be able to know when to trust it.
Two questions.
In checking your derivation of the 10 years growth rates I notices that you use a set of 8 year growth periods
e.g From 2000-2007, 2001-2008 etc. The formulae you e.g cell B77 of the DCFData sheet have is consistent with this being an 8 year period
i.e =IF(AND(B$30>0,I$30>0),(I$30/B$30)^(1/7)-1,0)
You then calculate the median of these "10 years data averages and use this in the DCF calculations, all fine and good If you meant it to be an 8 year period.
Your 5 year growth formulas all looks correct, just this "10 year". I downloaded the spreadsheet about 2 weeks ago, its v2010821.xlm
Is this purely a mistake or am I missing something.
Question 2.
For some companies your values are inline wth say Mstar, e.g JNJ however for some of the capital inensive oil stocks teh values seem way out of wack e.g XOM in the OSV gives $29.82 as the DCF intrinsic value vs say Mstar FV of $86
Any suggestions on when to doubt the values given or if a businesses capitalization is such that DCF will not give a "true " value I'd be grateful for. I wonder in these cases what Mstar are using since I thought they used DCF too!
I do note you have mentioned do not use the OSV for financial stocks, however it would be nice to know what specific financial metrics cause the DCF to be wildly inaccurate
Thanks
Rob
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