Intrinsic Value Calculation Template With 60 Stocks Explained (inputs + assumptions)
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- เผยแพร่เมื่อ 2 ส.ค. 2024
- How to calculate intrinsic value is a common question. The key to investing is to know what are the key inputs when it comes to intrinsic value calculation, how those affect the final intrinsic value and then it is about comparing our intrinsic values with stock prices. For that we have our template.
0:00 Intrinsic Value
1:35 Intrinsic Value Template
4:10 Intrinsic Value Inputs
4:47 EPS, DIV, CASH
6:23 Growth Rate
8:55 Discount Rate
12:09 Terminal Multiple
14:09 Present Value
16:21 Intrinsic Value Sum
18:34 Apple Value
20:42 Google
My first intrinsic value formula video explaining more the maths: • How To Calculate Intri...
Terminal multiple example video: • How To Estimate Termin...
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Verizon video: • Verizon Stock - A Divi...
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Hey Sven. What do you think about Rolls Roys, Lufthansa, american airlines and other such crashed stocks now that we are heading for recovery? I think carnival corp is a buy now, they are opening in june.
Sven, please analyze Applied Materials (AMAT) for possible inclusion in the Intrinsic Value Calculation Template. Historically, the stock has been cyclical due to the nature of the semiconductor industry. However, the industry is becoming less cyclical as the world increasingly depends on semiconductors on a sustained basis. AMAT's high margins, high cash flow & cash flow growth, low debt, innovation, optimized business management, and high demand from a broad cross section of customers in a wide array of industries give the company an increasingly wider moat. The dividend is somewhat small, but the company makes up for it by returning value to shareholders through stock buybacks. Demand for the company's products, and the relatively few well positioned competitors within the indsutry, is projected to grow on a sustained longterm basis. Barrier to entry into their industry is insurmountable for a new entrant due to the very high degree of technical difficulty involved, patents, intellectual property, long-standing established customer relationships, service contracts, and necessity to invest tremendous mounts of capital into innovation. All of this makes AMAT's products and services very sticky for existing and new customers. To be fair, there is competition from AMD, ASML, INTC, LRCX, MKSI, TER, TSM, UCTT and a handful of other competitors, but this is a relatively small group of companies in an extremely large and expanding industry where demand is insatiable. Also, each of these companies excel in their own unique ways, which further widens their moats because any one of the companies may also depend on others in the same industry for their distinct capabilities in the semiconductor production process. Any one of the companies mentioned would be worth analyzing, and getting your perspective on your analysis would be greatly appreciated. I'm particularly interested in AMAT because after hearing the quarterly earnings call and reviewing the associated slides, it seems especially well positioned within the industry. Great video.
Hi, sven i got question about your DCF, Intrinsinc value is the share price to the left? (apple normal 100) your estimates, and terminal value is the market cap normal case 2030 2,59 trillion?
Sven "The Value Investing Machine" Carlin. Happy Friday!
You too!
Smashing the Like button way before I read the title..
thanks!
@@Value-Investing my button has been tem "broken" due to much smashing ;)
This is GOLD, Sven
Thanks a million and have a nice weekend
Thanks, you too!
Killing it with daily videos Sven! 👍
just enjoying and feeling good.
The man keeps putting out great content!
thanks!
Just bought your book, can't wait to read it!
Great video as always!
Hope you enjoy it!
Thanks Sven as always great video! keep up the great work, you dont know how much time and headaches your saving me and im sure many others with these valuable videos!!
Glad to help!
Clap Clap Clap! you are a machine!!! Thank you for sharing your knowledge with all of us!!! Many blessings!
Wow, thank you!
I was waiting for this video, since you always bring up that excel template
Glad to hear that!
Thanks Sven for helping average people like me !!! Have a nice weekend
Thank you too!
This is superb! Thank you Sven! U r simply a class of your own! Legendary! So grateful for all that you taught us!
My pleasure!
Thank you so much for all your videos!!! Really love them.
Glad you like them!
Again a very helpful video, Sven. I especially like your view on the discount rate, which can quickly become very complicated and divert attention away from what we should be focusing on when making investment decisions: thinking about a business’ future and potential.
Glad it was helpful!
yep. Definitely one of your best videos. "thankyou and as always I smashed that like button".
Much appreciated
Love the content Sven! Thx again for doing this
Glad you enjoy it!
Thanks for explaining!
Looking forward to Sven's Berkshire Weekend!!!
Me too!
Love this topic! will watch it after work :-)
Hope you enjoy it!
Today is my last day as a commercial lender and taking what I would call a mini-retirement, some might not call it that. LOL. I have no plan except to spend more time researching and buying stocks, real estate, businesses, etc. I guess I will be busy enough. LOL All the best today Sven.
all the best to you! Enjoy it too!
Amazing value on how to value companies the value investing way!
thanks!
Hi Sven, I really appreciate your work. I am learning a lot with you.
thanks!
I totally agree with you when it comes to dealing with the discount rate, but we must remember that the financial industry must somehow justify the high cost to the client and the more complicated the work looks, the easier it is to sell 😉 Thanks for your work Sven, your contributions over the years have taken me much further than investment education has, especially when it comes to separating the unimportant from the important in the investment process. Your platform fee is a bargain compared to the knowledge you transfer and the simplicity of how you transfer it. I also apreciate how transparent you are about your work 💪 I think I will not be the only one with this opinion.
thanks!
You are the man!!! I bought some alphabet this morning. It is a cash generating machine.
Enjoy!
Wonderful video! Thank you so much.
You are so welcome!
World's best Teacher!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
thanks!
Very useful video! Thanks for sharing!
Glad it was helpful!
Thanks again for the great info .
Any time!
Sven could you please stop being so intelligent and so wise you are awesome if you keep going like this I’ll have to get on a plane and fly from the United States and become your student even though I am older than you ha ha keep up the good work excellent
ahahahah, thanks RAY!
Very helpful video but the main question should be: when i should sell The stocks i own? This could be a next video argument, good work anyway. Really appreciated
when you need the money for life, or have something better or don't sleep well at night! Nevertheless, a great topic and will make a video.
Thank you for your excel sheet it made me some good money :) but the main thing is that it made valuation and calculating intrinsic value much easier, I just find the ways other people calculated it and explain how to calculate it to be too complicated compared to yours.
happy to hear that!
Just imagine the time and the effort put behind the work. Also, watched the one about whether if the market is overvalued. I rewinded a couple times to make sure I heard Dr. Carlin right when he said it wasn't.
I just said what the market is pricing in!
Great video, thanks for sharing 👍
Thanks for watching!
Brilliant content. I’m amazed you don’t have that you tube thingy ( for a million billion subscribers) on your wall!!!
slow and steady value investing compounding :-))))
THANKS!
You're welcome!
Thanks a lot!
You're welcome!
VERY GOOD SVEN CHEERSSSSS
thanks!
Hey Sven
Thanks for your hard work and for sharing the list.
I miss Facebook and Unilever in your list 😉 maybe coming soon 🙏
ah, Unilever is not my kind of business. I'll update of FB soon!
@@Value-Investing thanks, looking forward 🙏👌
Wow omg how cool is this 🤩
great to hear!
Really helpful video as always Sven! Just noticed an error with Alibaba's market cap (currently showing as USD4.8bn) which is making the stock look way overvalued!
just google using HKD instead of USD ;_)))
Was long needed :-)
thanks!
Solid vid 👍🏻
thanks!
On the discount rate and the role of Beta in it, Domodaran suggests taking volatility of the earnings as the measure of risk if one desires to make an independent decision from what the market thinks. Just a remark. I believe, the key is the level of confidence in the discount rate no matter how one comes up with it.
thanks for the remark - but these academics always invent something new instead of taking common sense !
Thank you Sven, your content is really appreciated!!
What do you think about the Austrian Stock market right now?
Any merit to Schoeller Bleckmann or Verbund?
I would like to see Schoeller drop just a little more, Verbund is a good Company but seems a bit expensive atm.
Thanks again and Greetings from Vienna
don't know, haven't updates since: svencarlin.com/austria-stock-exchange-list/
Thank you Sven for sharing the knowledge. I was wondering if you could do some analysis on Canadian Dividend Aristocrat (Enbridge, Bell (BCE), Federals Banks, etc..)
Thank you for considering!
Great suggestion!
Ciao Sven,
Excellent video, as usual. One question: looking at your table, I see that according your analysis Alibaba should be overpriced. Am I correct? To me it looks just the opposite.
that is just Google taking the wrong data, likely HKD instead of USD :-))))
Hi Sven, love your work! What’s the difference between the premium version and the public version?
the depth of the analysis - it includes my portfolio, and the stocks that I know very good! - also it is from there where I buy my stocks from!
Hi Sven, love your analysis I get lots of value from it. What is your thoughts on Rogers Communications. This is a Canada business. Can you do a valuation on it?
thanks for suggesting!
Always interesting to see your videos! Was wondering if you could do an analysis of FUTU Stock, and share your opinion on it? :)
Great suggestion!
@@Value-Investing Yes, I think it's an interesting stock I learned about recently, especially these days when a lot of great investors are looking towards China. It's a stock that are related a lot to Tencent which is very popular. :)
Excel: Dutch is not strange, just complicated...
Important video again, thanks!
het is raar for mensen die niet Nederlands spreken :-)))
Niet = geen 😉
Great video, as always! Quick question if you or someone else can answer- shouldn't the Terminal Value multiple be applied to the last year of calculated cash flows? In your examples, you apply the multiple to the values at year 2029, as opposed to year 2030 (i.e. you take year 2029 * Multiple, but shouldn't the formula be Year 2030 * multiple)?
I don't have 2030 earnings in 2030, I will only have them in 2031!
Sven would it make sense to use EV instead of marketcap for a valuation? For companies with large debt or large cash reserves.
then you start complicating already :-) This is just the first step, then you look at what the risks are etc.!
LOVE YOU SVEN!! However, I don't understand what to use as an input for cashflows; sometimes we use FCF, but, for instance, I do not understand what you used for Apple! And what should we use for companies that still have negative FCF? Thank yiou so much! I appreciate you and your content a lot. :)
one day the FCF should be positive - if not the value of the business is zero or below zero!
@@Value-Investing Should we make an estimate then? I am a bit confused!! For instance, for TTCF (Tattooed chef) what would you use as cashflows? :)
Hi Sven i really enjoy your TH-cam Channel and would like to try out your research platform. But the price is too high for me. Would it be possible to add more options like a monthly/quarterly subscription?
ah, not for now:-( but you can always check it, then really join when you have enough.
If I may suggest, please use either market cap or share price (my personal preference) throughout all calculations
My mission as a teacher is to make people think too - just giving people fish is not my goal!
Alibaba market cap is 835b not 4835b (i thing the table at 0:02 has a typing error?) Thumbs up from Phil as always!
Yess.... I was like wait a minute alibaba at 0.22?!!! 🙄
Good spotting it!
that is google finance that changes things from HKD to USD and back day in and day out !
Hi! I have needed this. I have some questions though.
1) In the cash flow model, which data to use? Should I do it with cash from operations?
2) The part where you explained terminal multiple was really confusing. To me the formula of 100 divided by the dividend% doesn't make sense because if the dividend was say 2%, the multiple would be 50... that's outrageous.
Glad if you could explain these :)
1) ok, but deduct the capex too then.
2) that is outrageous, but they apply something more conservative - we don't know what the required yields will be in 2030.
@@Value-Investing Is the standard to do these calculations with free cash flow?
Sven what do you think about this formula :
intrinsic value score calculating formula = (net profit margin+dividend yield) / (stock price / book value per share)
if score 10 good It shows some legit scores for most stocks
I don't know - if it works for you!
For someone with a PHD in economics you could've done a longer section on a risk free rate. or explain it with the Markowitz model. (risk-free asset+1risky asset (stock,bond etc.).
The concept of risk free rate is the rate you are guaranteed to have in a year no matter what. You can just use the minimum applicable interest rate a starting point (0.11% is what most banks give minimally in Europe. (you can even look up for the highest which would be around 2-3% in europe )
I said I will make a special video when I will get the time on why I absolutely don't care about the risk free rate :-)
Hi Sven, thanks for a detailed vid. again on explaining Intrinsic Value calculations. I usually take the fcf of the company and plug that in and then do future growth projections then I discount everything back along with Terminal Value. Even though most companies I invest in don't pay dividends and the fcf usually isn't returned back to shareholders (but part of that cash does belong to shareholders if the company wants to find ways to distribute it back to us) will make the value of the stocks go up which ultimately mean the same thing for investors. Does that method make sense as well?
as long as you don't count things twice :-)
@@Value-Investing can you elaborate on that a little more pls
What would constitute double counting
@@Value-Investing it would be counting twice if I take fcf and then count dividends too?
Hi, Sven! Great video, as always. I have a doubt about dividend companies. Ok that you may hold a company especially because of its dividends (like Verizon in your example), but aren't you getting free cash flow to equity as a shareholder (which is different from dividends)? It is not very clear to me why we should use dividends to calculate the value of the company, even after your explanation of reinvestment and buybacks. Thanks in advance!
at the end it is only about dividends:-)
@@Value-Investing But if Verizon returns like 10% a year besides dividends, isn't it significant? And if you are using a 10% discount rate, wouldn't it imply that a dividend stock is always overvalued for a lower-than-10% dividend yield?
The "pay yourself first" part of finances is the part of investing that people over complicate. Terminal Value is what you want to earn. Based on what you want to achieve.
yes!
Hi Sven! In a case where a company is repurchasing shares and will continue to repurchase in the future would you consider the present value of the cash flows? Let's imagine that Berkshire will use 10% of cash flows to share repurchase, would you calculate de present value for those 10%?
that increases the growth per share of the cash flows - so you can do that but don't count things twice!
Can you make a video about defense stocks? Lockheed, Raytheon, Northrop etc.
I don't do war stocks and never will!
@@Value-Investing too ideological
Hi Sven, thanks for this lesson. Why did you increase the EPS to 6.50 i.e. what did you add to the reported EPS? What are all the numbers that you added up?
eps increased by $1
@@Value-Investing thank you
One question please....
LEG immobilien subsidizes the dividend by issuing stock or debt.
What would the most suitable for input 1 (EPS, dividend or FCF)?
I don't know much about the company, but maybe better to stay away if they are financial engineering it :-))
Would you please comment on ADP (Paris Airports) stock? You have talked about airports stocks before.
ً
have to update on the platform!
Could the sheet not fetch all the values you need if you enter a ticker code?
I think it could :-)
Only one stock I have a high conviction on and that’s Nio! Excellent earnings report. Their ET7 model that drops next year stole the car show in China. All the other car makers praised it. Can only imagine where the stock price will be when that drops next year. They are building a factory right now that’s 12 times the size of the of Tesla. China has the biggest EV market in the world and the government there is funding them along with other institutional investors. They are paying 0 to build that factory. Biden has a huge infrastructure plan for EVs and Nio is already hiring in the United States. They are already expanding in other countries and they are the only EV with a battery swap system. I’m sure in the long run people will go with the swap system over sitting at charge stations and having chargers built at their home. EV is about to boom and Nio has the best business model. Don’t be surprised if the share price hits $500 next year alone 🚀
I hope you did not see my video on them :-)))
@@Value-Investing probably not 😁
Just watched a professor of finance talk about weighted average cost of capital 15 mins ago, get mindblown with the math's and wording. Come to watch Sven's video. "Charlie Munger and I think it's bullshit. Thumbs up for Sven. Haaaa!
haha, thanks!
Does the dividends count for capital expenditures? Also when i use dividends for the valuation the number I get is the future dividend or the stock price?
1) no
2) if you multiple with 25 that implies a 4% dividend yield, the terminal value is the stock price
Sven, I still didn’t get your move on FT, is it a long investment or is it to catch the fruity dividend?
all explained in the docs!
Hey Sven, can you tell us how we can adjust the intrinsic value from EUR to USD for the entire template?
just change the letters - It is per company, not in EUR!
@@Value-Investing So for example, at 18:39, the present value for Apple in the best case is $152.53 in USD?
I have one doubt, when there is a Casflow statment and it says "Net change in cash" is it the same that "Free cash flow"?
nope:-) Fcf is operating cash flow minus capital expenses!
Sven, I see a "ratio' listed on your spreadsheet. Is this price/book? What other fields do you keep?
just my assumption to the market prices!
Hey Sven but how did you calculate or estimate that 10% discount rate, is it random or do you have some sort of formula for it or do you just use the discount rate formula for that?
I just use one and then compare, estimating it is just for academics to look smart!
Haha ok, for stocks I can agree. @@Value-Investing
I see in the latest spreadsheet that Alibaba is no longer good buy at 0.22 ratio of price to value. That is quite a difference from the video on Alibaba 4 months ago. Could you please explain why the difference?
yes, google finance uses HKD numbers :-)))
Hi Sven. Why Market Cap change in BABA from 620 to 4835? Any error?
google automatically uses HK data now :-)
Hi Sven, what happened to Alibaba on your table? It went from very cheap to severely overvalued (0,22 ratio). Did you update the analysis? Thanks
just google switching from USD to HKD ;_)))
Why do you not deduct the Net Debt from the calculated EV in the DCF calculation?
I calculate the cost of debt in the earnings or FCF
Could you do European stocks? Thank you!
that will be my focus next 12 months!
To which Yield does Terminal Multiple relate to when a growth company doesnt pay dividends? I mean if they pay it is the inverted dividend yield but what is it if the dont? Price to earnings ? Thanks!
depends really on the company - you can't take such fixed measures :-(
@@Value-Investing okay but which Types are there? I mean it has to mean something specific or?
I Opened and funded an ira at fidelity, but have no clue of what do buy, index funds seems overpriced, should i choose individual stocks?
you should buy a few investing books - start with one up on wall street and check my free investing course - link in description of video
I want to doublecheck if I understand it correctly. In case we take dividends per share then Terminal multiple is clear 100/(dividend per share %). But if it is Cashflow then terminal multiple is expected P/E ratio?
then it is the price to cash flow :-)
@@Value-Investing
Thank you! I was confused before what was actually used. But it make sense. Measurement used and its expected ratio to the price divided from 100.
Can u talk about GILT please? Thanks
thanks for suggesting!
Sven the living legend
haha!
Whats your view on hunting 100 baggers? Is that a reliable strategy?
it is a strategy, but not reliable and it for sure makes a good story :-)) I will make a video one day!
I do so much agree. I wrote my Dr. B.A. about the EMH and Famas studys. CAPM, Volatility etc. I think there is so much nonsense told in academia that will not get you anywhere. It's only noise. I think most Professors never even invested in the markets.
agree!
Why does Baba have a 4835 current market cap in the sheet? At this moment it's 634,76 in your video it was 620.54. I'm confused.
Google is using HK market cap :-))))
Hi Sven,
I noticed for Alibaba, the ratio 0.22 and market cap 4835 and now the market is 642 billion. There is a mistake or you discovered something else?
Many thanks ☺
that is google, that uses various data,likely from HK instead of NYSE!
Since dividends are just a fraction of earnings isn’t applying terminal multiple to dividend going to result in undervaluing the company compared to using earnings?
For example company earns $10 per share PE 10 stock price is $100. But if they paid $5 per share dividends your valuation is now $50?
depends on the valuation you put on that. PE ratio of 10 with 50% payout is a dividend yield of 5% - so 20 terminal multiple on dividend and 10 on earnings
Thank you!
God save Sven, the paladin of all value investing students
haha, thanks!
Are the Alibaba numbers correct? 0.22
Just google finance using HKD instead of USD :)
When using market cap, doesn't that dismiss the fact that some companies have a large amount of debt compared to cash? Would a comparison with enterprise value be more accurate? Ahold, for example, would change from undervalued to overvalued.
Should use enterprise value in that case.
but then you have to start adjusting for interest costs etc! I prefer using common sense later on debt issues
Is there a mistake in your data? Alibaba says that it is overvalued by a 0.22 ratio for a 10% return yet it has an intrinsic value of $1040. Or am I misreading the data? Alibaba seems fairly cheap from what I have seen. Tesla seems more accurate at .13 ratio and $83 intrinsic value.
just google finance automatically using HKD data instead of USD
The game in stock market is played on pricing which comes from growth and risk, if you ignore risk then you overestimate risky stocks and underestimate safe stocks. The price of the stock isnt determined from your personal risk but from the market risk. If you looking for 10% returns then you will get simply stocks that are priced for that risk.
Excellent point! But this is just the start - then we look at risk and seek the ones the market is wrongly pricing :-)
I agree on absolute return for discount rate ... it's totally personal ... how can you compute the risk free rate and specific risk of the market and operating country for AAPL when it operates GLOBALLY. Discount rate should just simply be what you as an investor want to get back from your money.
yes!
When i use eps and then i try it with cashflow, the values are completely different. Especially for companies that has cashflow in the millions not billions. Is this only for companies in billions?
think of the input!
I cannot find the template.
sven-carlin-research-platform.teachable.com/courses/335443/lectures/30817849
@@Value-Investing TY Sven
Verizon 2030 prognosticated dividend is 5.18. The terminal multiple is 20. Should the terminal value not be 103.6? The terminal value is given as 94.18. Is the 2030 terminal value based on 2029 dividend?
I don't have 2030 data in 2030, only 2029 data:-)
Sven I understand but do not agree. All these numbers are financial approximations, instead of accounting data. 2030 valuation reflects 2030 and 2031 earnings expectations. No big deal, but I would put it just 2030.
How do we get Peter lynch type returns
To begin with, we would need double digit interest rates... And being as brilliant as he is, we would also need a lot of work and a bit of luck. His greatest achievement imho was retiring early and enjoying life
The reason he is famous in the first place is only a handful of investors have ever achieved such long term returns. There's no surefire way to beat the market, if there were that would be the new market to beat.
we work hard!
@@Value-Investing it's possible though isn't it Sven 😉