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2:38 pm
July 26, 2010
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Jae Jun
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In this market 15% is marking every company as overvalued so 12% should work in this type of market.
After all, investing, like everything else is a game of adjustments. You need to know how to adjust to the conditions rather than just be set a certain way.
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1:57 pm
July 26, 2010
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Jonathan Watson
| | Los Angeles, CA | |
| Member | posts 11 |
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I think there is some value in using the same discount rate for all companies…helps compare apples-to-apples. Alternatively, large companies probably need a lower discount for a conservative estimation of intrinsic value. I like what Joe Ponzio recommends in F Wall Street. His discount rate for the first 5 (or so) years is based on the recent growth and then defaults to 5% after that. Just another way to conservatively estimate future growth to build in a margin of safety.
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11:32 am
July 26, 2010
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itconsultant
| | Irving, Texas | |
| Member | posts 34 |
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I tend to use 12% as the discount rate off late. I was also using 15% till recently. A fund manager told me that with 15% discount rate, you will find most stocks overvalued. He actually does not use WACC. He uses the same 12% for all cos and that helps him compare the attractiveness of a firm. He does not adjust if one is more levered etc. He just needs a strong valuation to make it like it.
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6:56 pm
July 25, 2010
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Jae Jun
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One thing to remember is that you have to manually choose the growth rate for the graham valuation.
In the previous version if a drop down list is not used, then the growth rate updates automatically, but it looks like the list values don't update to the cell itself.
Deciding whether I should just have the separate growth rates in a small box on the side somewhere and change the growth rate cell back to a single value that will udpate as opposed to a drop down list.
That way you would be able to see the different growth rates and adjust in the override box.
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2:35 pm
July 25, 2010
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Jonathan Watson
| | Los Angeles, CA | |
| Member | posts 11 |
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I simply entered the ticker and ran the stock valuation spreadsheet without any adjustments…so the DCF growth rate is the average of the 5 and 10 year Free-cash-flows discounted at 15%, and the Graham calculation is based on 9.7% growth and the EPV is discounted at 9%.
These numbers will need to be tweaked for many companies, but I figured they were a good approximation.
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11:35 pm
July 24, 2010
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itconsultant
| | Irving, Texas | |
| Member | posts 34 |
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Jonathan,
I looked at the google sheet. thanks and good work.
can you tell what growth rate and discount rates you used for dcf, graham method, EPV.
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10:08 am
July 24, 2010
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Jonathan Watson
| | Los Angeles, CA | |
| Member | posts 11 |
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Jae-
It works for me, but that may be because I created it. Perhaps if you login to google docs and save a copy? Sorry for the inconvenience.
Jonathan
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12:49 am
July 23, 2010
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Jae Jun
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| posts 1336 |
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ok that link is working. But cant sort the columns or anything.
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10:33 am
July 22, 2010
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Jonathan Watson
| | Los Angeles, CA | |
| Member | posts 11 |
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Hmm…that is odd. I have replaced it with the link below, hopefully the valuation numbers came across this time.
http://spreadsheets.google.com…..y=CKzL_LUL
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10:17 am
July 22, 2010
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Jae Jun
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| posts 1336 |
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a lot of work you've put in. Must have taken a while to get all those numbers.
For some reason the valuation columns are empty which is resulting in bunch of N/A errors.
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10:31 pm
July 21, 2010
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Jonathan Watson
| | Los Angeles, CA | |
| Member | posts 11 |
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Here is a link to a google spreadsheet that contains a list of all companies on the S&P 500. I've included the current price, P/E ratio, Graham Valuation, DCF valuation, EPV, and a simple average of the 3. (The numbers were taken directly off the most recent spreadsheets without any manipulation in the calculations). Feel free to use/change it in any way that is helpful to you. I would be interested to see what other's do with it.
http://spreadsheets.google.com…..y=CK-M5dsD
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