Comments on: How to Value Stocks using DCF http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/?source=rss Perform Stock Valuation Automatically Fri, 10 Feb 2012 19:29:58 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Jae Jun http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-8687 Jae Jun Mon, 12 Dec 2011 20:16:12 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-8687 @ alexo, If you go to the DCFdata tab (it's hidden by default) you will see the WACC calculation at the bottom of the page. @ alexo,
If you go to the DCFdata tab (it’s hidden by default) you will see the WACC calculation at the bottom of the page.

]]> By: alexoviedo999 http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-8685 alexoviedo999 Mon, 12 Dec 2011 04:32:08 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-8685 Hello Jae, Great website!!! I agree with your views on WACC, however, I am a MBA student and some of my professors want to see WACC as part of the DCF valuation. When using your DCF spreadsheet there is an option to use an already calculated WACC in the drop down discount menu, but I don't see how that number came about. Can you point out how the spreadsheet comes up with the WACC? Hello Jae,
Great website!!! I agree with your views on WACC, however, I am a MBA student and some of my professors want to see WACC as part of the DCF valuation. When using your DCF spreadsheet there is an option to use an already calculated WACC in the drop down discount menu, but I don’t see how that number came about. Can you point out how the spreadsheet comes up with the WACC?

]]> By: Jae Jun http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-8651 Jae Jun Fri, 18 Nov 2011 09:20:44 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-8651 The answer is very basic. How do you calculate FCF? Even the basic formula of FCF (Cash from Operations - Capex) excludes dividend payouts. This is comparing apples to apples. The answer is very basic. How do you calculate FCF?
Even the basic formula of FCF (Cash from Operations – Capex) excludes dividend payouts. This is comparing apples to apples.

]]> By: Shane http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-8650 Shane Fri, 18 Nov 2011 02:49:40 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-8650 I can see a few flaws with this method, firstly you are calculating the value of a stock of based on the company only staying afloat for N years, when in reality a companys earnings should be treated more like a perpetuity. Second as Tyler said if you apply a growth rate the way you have you will end up comparing apples with oranges. ie take for example two companies who are in the same business with exactly the same earnings but company A pays out a 50% dividend and company B pays no dividend. In this case company B will have much higher growth and therefore you would value the stock much higher, but the total return from the two companies (if you reinvest dividends at the same return)if you ignore tax will be identical. I can see a few flaws with this method, firstly you are calculating the value of a stock of based on the company only staying afloat for N years, when in reality a companys earnings should be treated more like a perpetuity. Second as Tyler said if you apply a growth rate the way you have you will end up comparing apples with oranges. ie take for example two companies who are in the same business with exactly the same earnings but company A pays out a 50% dividend and company B pays no dividend. In this case company B will have much higher growth and therefore you would value the stock much higher, but the total return from the two companies (if you reinvest dividends at the same return)if you ignore tax will be identical.

]]> By: Tyler http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-3834 Tyler Fri, 04 Dec 2009 01:45:55 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-3834 ive been speaking to a value invester quite reknown here in australia this is what he had to say on DCF formula. ps im not saying hes correct just putting the opinion out there. "You are simply using a formula that only applies to companies with 100% pay out ratios. The formula is slightly different for a company that retains and compounds earnings. Risk free rates are useful in risk free environments." ive been speaking to a value invester quite reknown here in australia this is what he had to say on DCF formula. ps im not saying hes correct just putting the opinion out there.

“You are simply using a formula that only applies to companies with 100% pay out ratios. The formula is slightly different for a company that retains and compounds earnings. Risk free rates are useful in risk free environments.”

]]> By: Jae Jun http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-3821 Jae Jun Thu, 03 Dec 2009 05:50:21 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-3821 Maybe this link will help http://www.wallstraits.net/articles/1304 Maybe this link will help
http://www.wallstraits.net/articles/1304

]]> By: Tyler http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-3816 Tyler Thu, 03 Dec 2009 01:40:58 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-3816 Can you explain beta and WACC and why its not good. im quite new to this Can you explain beta and WACC and why its not good. im quite new to this

]]> By: Jae Jun http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-3810 Jae Jun Wed, 02 Dec 2009 06:10:57 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-3810 I don't fall into the side that uses WACC because it relies too much on beta. And we all know how much fluff beta is made out of. I don’t fall into the side that uses WACC because it relies too much on beta. And we all know how much fluff beta is made out of.

]]> By: Tyler http://www.oldschoolvalue.com/blog/valuation-methods/how-value-stocks-dcf/comment-page-1/#comment-3805 Tyler Wed, 02 Dec 2009 00:56:03 +0000 http://www.oldschoolvalue.com/blog/?p=2650#comment-3805 for discount rate should u use WACC for discount rate should u use WACC

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