How To Calculate Intrinsic Value UPDATED (Apple and Ford Stock Examples)
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- เผยแพร่เมื่อ 20 ก.พ. 2020
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Download the spreadsheet template below:
bit.ly/2uXVSKC
Being able to confidently value a stock is essential in value investing. Buying with a margin of safety is very good for your financial health!
I hope this video gives you all a good example of a simple discounted cash flow valuation method.
Recommended Investing Books:
Rule One by Phil Town:
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Payback Time by Phil Town:
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The Intelligent Investor by Ben Graham:
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The Dhandho Investor by Mohnish Pabrai:
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The Education of a Value Investor by Guy Spier:
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Recommended Personal Finance/Entrepreneurship Books:
Rich Dad, Poor Dad by Robert Kiyosaki:
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Tools of Titans by Tim Ferriss:
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Disclaimer:
I am not a financial adviser. This video is for education and entertainment purposes only. Seek professional help before making any investment decisions.
#intrinsicvalue #valueinvesting #stocks
Hope you all enjoy the video!
Download the spreadsheet template below:
bit.ly/2uXVSKC
So what do you this is ford is going to get bankrupt .
prathamesh satardekar not necessarily, but I think it needs to be considered in valuation
Thanks Tom! I downloaded the template. For the '1 year free cash flow' section, i am looking at a company that has a annual free cash flow of 665 million. You have put apples FCF (in your example) in the billions. What is the correct way to enter the million amount so that it aligns with all of the calculation principles correctly? Where do I put the decimal point? Thanks!
Bobo Fet $0.665b will do it. Might just want to edit excel to show a few more decimal points so it’s not just rounding to the nearest billion with your answer
@@InvestingwithTom Hi Tom, from the UK and looking at some UK LSE stock exchange companies - does this only support certain stock exchanges. Does this not work with, for example, LSE?????
This is the most usable and simplest explanation I could find on the internet.
thank you!
@@InvestingwithTom Hey I’m very new in stocks.
How can I find intrinsic value in terms of per share from this calculation?
Mate, I’ve been looking for how to calc intrinsic value for months, you described it in the most sensible way in just 15min, big cheers from down under!
PS: the spreadsheet is icing on the cake 👍
Just want to say thank you for this and your other intrinsic value video, it’s fantastic and helped a lot
Riain Morrison appreciate it. Thanks a lot for watching
Much clearer and easier to understand than any other method I’ve found and still looks to be conservative, doable and simple (relatively speaking). I think it’s a good tool in the toolbox! Thanks, good on ya!
Thanks for this! I feel the way you have done it is so clean and much simpler to follow compared to other videos!
Love your videos and your ability to simplify complex concepts in a way that anyone would understand. Kudos!
This was amazing, appreciate it! And Pabrai is one of my favorite investors too.
This Excel sheet is amazing! It makes valuing companies so much easier. Another great tool to add to the arsenal.
Hi Corey, could you share with me what other tools you use out of your arsenal? I would like to learn from it
This is an exceptionally well communicated presentation. Clear, concise and accurate. Well done.
Thank you for watching do not forget to hit the subscribe button.!
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Tom, thank you very much for doing this. It's very clean and straightforward, which I appreciate. Keep up the good work!
Ted Daigle thank you!
Thanks for this. One of most helpful videos I have seen so far
Hi Tom! Great job once again. Thx for the spreadsheet. This is super helpful for us value investors!
Thanks Tom, this is a lot easier to follow than most DCF videos. Ill have to add Pabrai’s book to the bookshelf!
Angus McKay glad to hear man! Just finished reading it for the second time 😂
thanks for doing this. appreciate the work and your generous sharing.
Thanks a lot tom for the spread sheet. Wish you all the best from across the ditch.
Very nice video on DCF. Just what I was looking for. Thanks! 👍
Thank you for the file. I've been looking for a simple explanation on how to do this.
Bro you explained this better than all my university textbooks. Thanks.
I’m just now finding this video but it is super helpful. Thank you so much!
Thanks Tom! Really useful video!
This is actually the simplest explanation I came across and I think this is all we need to get an idea how much a company is worth.
I'm really glad you gave the spreadsheet tool. Thanks a lot
Glad it was helpful!
Hi Tom. Thanks for that video. It's very instructive. This is just one aspect of value investing and, even though I read a few books about it, I get confused in the trillion of information out there and I would love it if you could comment or make a video about the other steps you take before to decide to buy a stock. Thanks again
Awesome, great video. This is great stuff. Please continue putting out this level of content. Appreciate you sharing your calculations
Marshall Jones no problem, thanks for watching 🙂
Thanks Tom, I from Perú and appreciate your videos.. a big hugs
Exceptional video Tom! Well done from across the ditch
Hey thanks a lot Tom, I study some of your videos on how to educate others about finance with my channel! I appreciate all that you do
Great video with added and subtle lessons from SRG
Hey Tom! Great video. Thank you for everything. I had one q. What if after quarterly report the growth rate becomes negative. Does the calculator still predict accurately?
Thank you for the video. Could you wrap it all together and show how the intrinsic value of a company, the goal price that we would buy at, and how the current stock price and goal stock price compare to that?
The Intrinsic Value of This Video is very high, big thank.
Great presentation ! Thanks.
Awesome video! This is exactly the stuff I'm teaching myself to do. Thanks for the info!
DonnieDarko happy to help!
hi, nice video..... let's start a handshake job ......i subbed to ur ch ..u too sub my ch.... sub= subscribe........those who want to do the same can reply to my comment .......
Brilliant Tom. I am a fellow kiwi as well. All the best to you.
this saves so much time. you the best Tom. I think FB is already undervalued in my calculations at least.
Great pick
MR.Twentysix take a look at the balance sheet and lemme ask u if u use Instagram still? WhatsApp? Facebook? But simply looking at how efficient the company is and how much cash they have, top 5 in balance sheets in the world. EASILY. Don’t get caught up in short term news. What stocks do U hold right now
Love your video! Cheers from Mexico!!
This is good stuff. Thank you
Great video and explanation
I use your template a lot. Thanks for this! 👊
No problem, thanks for watching 🙂
Great tutorial. i tried this on Intel, if the inputs are right it shows it's at a good price
How the result?
Mate, I have got a big job now. Your explanation is extremely clear and easy to follow compared to others I have seen. With regards to long term debt, our friend Mr Town suggests free cash flow should be able to pay back debt in 3 years. Thats a good rule of thumb in my opinion. Thanks again.
henry michal no problem thanks for watching!
Very nice video! Thanks for the spreadsheet... I have searched a lot for one..
M C happy to help 🙂
Good stuff bro. Nice to see a fellow Kiwi creating content.
Great youtube video again. Nice and clear.
Thank you!
Thanks so much for the insight on looking at enterprise value instead of market cap for companies with a lot of debt. Where did you find/come up with that idea?
very informational thanks
Love your channel mate! I subbed! ✅👍🏻
Just subscribed Tom. Found you via Aussie Wealth Creation.
So happy to be finding Aussie and Kiwi Phil Town fans.
(I'm an Aussie)
Brad Jones thanks for coming across!
great video and thanks for the spreadsheet ;)
I've got Dhandho sitting on the shelf, just need to get around to reading it.
Love your work mate! 👏
Joshua Williams nice one, I actually just finished it for the second time 😂
@@InvestingwithTom How is Dhandho different from The Intelligent Investor reading wise? I am reading the latter one and this style of English is killing me. Although, English is not my mother tongue. Thanks for the spreadsheet. Really appreciate.
Rihards Grebuns Dhandho is a MUCH easier read honestly
Hi. Thanks a lot for this. Regarding your other vid and spreadsheet, are you saying that this video’s analysis and spreadsheet supersedes your precious one or....? As a beginner with a small fund to invest, I’m just wondering when you might use one or the other, if the earlier one is still relevant. Thanks again
Tom, another great video. Can you also make another video about systems that value investors use? It can be the website they research, or the tools they use, note taking techniques, interview techniques, etc. Thanks again Tom for your valuable videos!
Great video, thank you Tom. could you pls share how to deal with negative cash flow in a DCF? thank you.
Very helpful 👍
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Loved the video! I'm planning on writing a program to value companies automatically. I couldn't find the formulas for the calculations you mentioned. If you could let me know that'd be great, thanks!
Good job dude!!
Your subscriber # will grow exponentially over time. Excellent video straight to the point.
Thanks! Appreciate it :)
Great video again!
great video, thank u
Good stuff mate!
I did this for Tesla. Wow! Thanks for the simple, straight forward example.
What was the price?
Per share obviously. Ta
Hi Tom, really enjoying your channel. Quick question, what do you find to be the best resource for NZ company data?
Great video! How do you decide which intrinsic value calculator to use? Phil Town or DCF?
Such a great video, put in a simple method! Great job!
Keerthy Muthiah thanks for watching 🙂
Thanks alot.
Great video, should we be using the TTM number for FCF, or the previous year?
Hi Tom, Thanks for the informative video. How does this formula work for companies with market cap and cash flows in the millions? e.g. for FCF in the spreadsheet do we input 500 million as 0.5, or simply 500? Thanks!
Hey Tom I love your content , I was wondering what was your formulas to generate the PV . compared to your first video of I could duplicate and understand but my numbers are not matching
Hello Tom, Thank you for your video. How did you determine the terminal value of being 15 ?
Thanks Tom, Can you also explain to compare results of DSF with PEG ratio P/CF and PE ratio to double check our result.
Hi Tom. Thanks for this video. It was very well explained. I'm having trouble downloading the spreadsheet to try out the process. After I save it and open it I just get a whole heap of videos etc popping up in the excel spreadsheet and the calculator has disappeared. Any ideas or is this calculator available elsewhere? Thanks
Hi Tom, thank you for the educational video! My question is if the formula for Enterprise Value is (Market Cap + Total Debt - Current Cash), why did you suddenly exclude the total debt and current cash in your Enterprise Value calculation, and just used the Present Value of Future Cash Flow?
SAME QUESTION
The excess capital was also excluded so I think it has sumthing to do with that
Hey Tom very nice vid! Quick question if under analysis the growth rate for the next 5 years of a stock is N/A, what do I use to calculate the IV instead? Thanks.
Thanks for the video. How do you calculate Enterprise Value if it's a bank? Or is it a different approach you follow for Banking sector?
awesome stuff
What kind of levels of debt would you consider using the enterprise value vs. the market cap?
Thanks for sharing. What is the period over which you take the discount rate? 10 years?
Loved the detailed video!!! What if the growth is negative, how will it be adjusted. I looked up Ford and currently yahoo estimates it to be -19%. Can you share some insights on that?
Nice explanation - I agree that debt MUST be considered and I really like companies with negative Net Debt to Equity, in other words more cash than debt.
INVEST for the future I like it!
Would you use enterprise value method with financial institutions? Thank you
When using the growth estimates, do you use EPS, Revenue, Operating Income , net income?
Thanks for the video Tom! However our stocks in Vietnam don't have a platform that shown "Grown estimate in future", can you please show how can I calculate that percentage?
Hey! Great video but I had a doubt...what do we do if the company's free cash flow is negative?
hey Tom, great vid, but do i have to pay for excel if i want to use this spreadsheet?
Another good video. Keep making them :)
thank you! Will do :)
If I am just looking at growth rate for 1-5 years how will i adjust the formula and changes does it make?
Thanks btw great vid!
To your first tab , i added a row for current market value and then a row for the Margin of Safety. So i subtracted intrinsic value from market value and put that over market value. Positive % result is good and i guess i would look for 20% or more. Result comes to 14% but that is based on current market value and a 10% disc rate, not market val at time you did this. I like to see that margin o safety.
Great video!
antfoo thanks 🙂
Thanks!
Hi thank you for the educational video?
Question. I watched you other video on How to calculate intrinsic value with Apple my question is IF Value was 145 and margin of safety 72, What are the chance apple go that low? If it hit that price it doesn't mind that something in its fundamentals it's really wrong and after that just keep going down? Thank you in advance!
Thanks for sharing the spreadsheet with us Tom! Really interesting calculation. 👍🏻
Michael Schmidt no worries. Thanks for watching!
Hi Tom! Awesome content yet again. Had a question regarding ford as of Sept 26, 2021 - According to your calc, Ford is sort of overvalued considering enterprise value. However, today's number shows growth in next 5 yrs = 72% (taking 5-10 yrs growth as modest 5%), terminal value of 10 and rest numbers from yahoo finance (Cash increased 3B and debt reduced 10B comparing values from your video) and I get intrinsic value of $950B. Is my calculation correct? Discount rate of 15% considered.
So I am loving the videos on valuing stocks. Anything on when to get out of a stock? Rule 1 mentioned Mac d.. stochastic and MA but at least in the version I had there wasn't much detail. Also great recommendation on Dhando Investor.
Video is very informative. I have a question on growth rate. In case i dont get growth rate on yahoo finance for a company how do I measure it myself? Should it be CAGR of net profits of last 3/5 years or should i consider avg growth rate?
Thx, that method for intrinsic value is interesting!
Philipp Pogosov appreciate you watching!
Hi Tom, what about Rule 1 method by Phil town, are you going to show it as well?
Hello Tom, great stuff!!! I downloaded the calculator and was trying to input the info for AAL but, first, I could get a growth rate for the next five years, and and that was negative 45%. Yahoo Finance only shows next Qtr. and YR. Second, it's negative. How can you value this company? Thanks, Jose
Hey @InvestingwithTom, do you have a more calculated breakdown of the discount rate? Subtracting current cashflow from liabilities?
Michael Rae no is the short answer!
Wooow, so laser focused right off the bat ! I like it. Almost like reading from a script hahaha, Thank you very much for the update I really appreciate your time and effort to explain things so well and going above and beyond by sharing your spreadsheet. Bravo
Luis Paz no problem at all mate! Thanks for watching as always