Discounted Cash Flow - How to Value a Stock Using Discounted Cash Flow (DCF) - DCF Calculation
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- เผยแพร่เมื่อ 27 พ.ค. 2019
- Free Excel DCF Template: investorsgrow.com/what-is-dcf...
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Discounted Cash Flow Calculation
2:13 - When to use Discounted Cash Flow (DCF)
3:33 - Where to Find the Data for Discounted Cash Flow
4:43 - How to Calculate Free Cash Flow
7:17 - Forecast Free Cash Flow
13:17 - Required Rate of Return (WACC)
20:15 - Finding Shares Outstanding
20:53 - Perpetual Growth Rate
21:47 - Calculate Present Value of Free Cash Flow
22:04 - Calculate Terminal Value
23:39 - Calculate Present Value of Forecasted Free Cash Flow & Fair Value of Stock
24:48 - Issues with Discounted Cash Flow Calculation
Excel DCF Template: investorsgrow.com/what-is-dcf...
What is Free Cash Flow: • What is Free Cash Flow...
What is WACC: • What is WACC - Weighte...
What is CAPM: • CAPM - What is the Cap...
Margin of Safety Video: • When Do I Buy a Stock ...
In this video, we walk through how to perform a discounted cash flow analysis of a company with the ultimate goal of trying to determine what the company’s intrinsic value is. Every investor should have a basic grasp of the discounted cash flow (DCF) technique. We go through the actual discounted cash flow formula and then we walk step by step how to perform the DCF calculation and where to get the information needed to calculate the intrinsic value of a company using DCF. In this example, we analyze Apple’s stock and perform a Discounted cash flow analysis on Apple to see if we can determine what the intrinsic value is.
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DISCLAIMER: I am not a financial advisor. These videos are for educational purposes only. Investing of any kind involves risk. Your investments are solely your responsibility and we do not provide personalized investment advice. It is crucial that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. Please consult your financial or tax professional prior to making an investment.
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For those questioning the debt portion of the video, I explain it here: th-cam.com/video/Sus7RTY66vw/w-d-xo.html
Hi Jimmy, there are some great companies (e.g FTS , TSX:CNR) with negative cash flow . is there anyway to evaluate those companies using DCF ? what do you think about an evaluation based on Book Value ?
jimmy where did you get the number for short/current long term debt? because I do not find those number in the yahoo finance or 10k form please help
Where can I find the short and long term dept?
@@simondh9322 on the balance sheet
@@jyo5764 on the balance sheet
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@@raymondbarnes5264 Look up with her name on the web.
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Never seen anybody put out so much information without first talking about their *online course only $999.99*. keep up the good work 👍
Discounted from $12,950!
yah lol
Price doesn't end in a 7. I'm not buying
Agreed!!
@@dh2266 lmaooooooo
This is a gem of a video. I have a master's degree in finance and I can tell you this video is worth a semester at college, ie several thousands dollars
That's a very kind thing to say, I really appreciate it! Thanks for the support!
How dou get net borrowings?
I 100% agree. I’ve taken 4 valuation classes thus far, and this video explained it better than all 4 combined.
Learn to Invest Where can I find the short and long term dept?
I have a pHD in Business.
There is a lot of undergrad and grad students thanking you right now.
This video will not go viral and you will not have 50, 100k views in short run, but on the long run, you will have more views with this video then all other more popular youtubers because thia video is timeless
Greatest comment ever!!! I really appreciate that. I was afraid it was too long, but I didn't know what else to cut out without hurting the message. Thanks so much for the support! #DCF :)
Learn to Invest love the content, you are literally the only investing related channel I’m following now. Unsubscribed others. Please keep up the great work and don’t compromise because of duration of the videos. This work requires the time to communicate effectively. Thanks again!
Learn to Invest Where can I find the short and long term dept?
Maybe he should promote this with a clip of a young women in a bikini, then it might go viral.
today is Jan 24th, over 200k! Congrats!!
BTW, I am a truly beginner to investment and I don’t have a degree in Finance. Had a hard time understanding the notions 😂 I’ll probably just use it and learn along the way.
Keep up! Thank you for your sharing!
It took me 3 intense hours to follow the example but totally worth it. Yes, there are people out there willing to fully view this type of videos. Keep up the great work.
for me it took me 4 hours, but its worth it
i still dont get it how 107% fcf margin X net income get the calculated amount 13:04
@@qi4020 If you switch the equation around of Free Cash Flow Rate (%) = FCFE / Net Income. so that when you need FCFE, it's FCFE = Average FCF Rate(%) * Net Income
It's taken me at least 3.5 hours so far taking notes and such. I wish I worked this hard in school lol. But my teachers were not as good.
I made the spreadsheet that follows the video. It really helps. Let me know if anyone wants to buy it for $5!
Great video, as a recent MBA Finance grad this was a nice refresher to building my financial model
How am I JUST finding this guy? WHAT A GEM!
You summarized an entire semester of classes I took, thank you sooooo much
I learned both the CAPM and WACC model in my finance class, but I was never taught how to apply them in real life. I got more out of this video than a full year of finance courses. Great job Jimmy, you are amazing!!!
How did he get 18.34% in the WACC model? Thats the only thing idk
@@davionchambers6124 do you understand how he gets net borrowings?
@@jeremykuhnert5996 Yes
@@davionchambers6124 please, can you explain?
@@Tiffany-gm5nf he does a great explanation at 15:30 mark
This video is a senior level undergrad class. Also master’s level. Wow, extremely undervalued
Finally I found a useful video to value a stock using DCF in a real example.Respect！
This is something that is rare in today's tube, tysm sir appreciate ur work! Keep teaching and inspiring others
Two thumbs down came from guys who want to sell DCF as course.
Lol, 😁
You are great jimmy
@@LearntoInvest where do you find net borrowing?
@@rezapahlevi5056 Look for the CFF or cashflow from financing activities in the cashflow statement.
WOW it is 2022 and this is gold, Im 18 years old and you have no idea how useful this has been to me. I'm very grateful for this video!!
this is just the kind of video i was looking for. it is a little too complicated for me to listen to. After two pages of notes i feel like i dont have the energy to apply it ket and need to rewatch it all over again so i can apply it. I understand what you were talking about the whole time but became lost several times. I love the video and thank you for covering a whole class worth of information in under 30 min!
Seriously. I CANNOT say enough good things about this video. WHAT AN INCREDIBLE WALK THROUGH. Literally saved me this semester as I was struggling with valuation.
First time I see a DCF video clearly explained, thanks for sharing your knowledge :)
I truly love this channel's content!
In the past I have attended to paid webinars, read books, watched tons of videos of people "analyzing" a stock just by looking at the share price and some random indicators, and none of that worked.
This content has helped out to understand that buying a stock is not betting on the price, but actually understand what I´m buying and the different actual drivers that influence the performance of a company.
Thanks for this great content!
😳 If you don’t have a lot of patience and love for the numbers, you’ll fall into a deep hole with wrong outcome. I have a bachelors and masters in aerospace engineering and I had to watch this twice and work through it SLOWLY…..Don’t be discouraged!!
Great video, I feel like I am smarter than I was yesterday.
Is it weird I go wow watching a video on DCF instead of a music video? :) . You reminded me a lot of a respected lecturer in my university who is so enthusiastic with his well-designed and detailed lectures. The students couldn't get their eyes off him and his slides. Thank you for your video!
I spent three hours taking notes from your lecture. I normally don't comment on you tube, however the value that I gained from your DCF lecture is immense. With that said, THANK YOU and well done sir!
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere?
Best video on value investing by a country mile.
I’ve done the math, exactly as you you said, and I can confidently say, that your channel is undervalued!
Took me 5 times of watching to wrap my head around this but it was still some of the most straightforward explanation on how to do this. Thanks Jimmy.
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere?
The video was literally the missing piece to trying to understand this amazing approach to calculating intrinsic value. I cannot thank you enough for the time and effort you put into organizing this!
THANKS FOR YOUR VIDEO! Very clear even though I have to come back and forth several times! Great job !
This channel is like free college classes 💪🏼 excellent work Jimmy !!
While everyone on TH-cam are busy in providing only definition and getting views you dig deeper to actually provide what is important than definition and I think it's the best vedio on DCF
One of the most undervalued channels on TH-cam. Excellent video, informative and explanations are great! Keep up the great work! Subscribed and signing up to your website 👍 thank you
I watched a lot of videos in other channels in Spanish and English, definitely this is the best class that I found in all TH-cam. Great class Professor !
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere???
I’ve been looking for investing videos and thank you for giving actual information, not just fluff and bs. I am so grateful
I spent the last year reading books like, Security Analysis and The Intelligent Investor, and it's been tough learning on my own. All I say is... WHERE HAVE YOU BEEN ALL THIS TIME?! You summed up all the endless hours I spent studying, into a simple and clear video under 30 minutes. Amazing and informative teaching skills. Most only show an example, you explained how to apply it in real time. 10/10
This is my first ever comment on an investment education video on youtube, and i must say - THIS IS GOLD
I've searched several other videos on DCF. This is by far the best. Clear and simple explanation! Thank you.
Probably the most complicated stuff I’ve heard of for a long time. I’m new to the stock market. But as a big DIY fan it’s important to understand what you’re doing. Especially when investing. So expect to get many more views from me on this video in the upcoming days :-D
I must say I’ve watched all your videos and they’re pure gold Jimmy
Great video! Clean and concise. Highly informative! Really appreciate your quality work.
Amazing- God Bless for fruitful life for making these videos!
I did this for 2020 using your exact methods and I got a fair value of only $68!
Thank you Jimmiy for delivering such a well-explained DCF modeling video!
Just want to say a personal thank you, this is explained as simply as is required but not dumbed down
💯God bless you sir. Your video's are awesome. It helped me a lot ❤❤❤❤❤❤❤❤❤❤❤❤ from india.
On terms of education around investing as a subject, this is the best account on TH-cam available, imo.
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere?
I will surely recommend your channel to every beginner. Hope I could have found it out sooner. Great content and explanation btw.
This is Outstanding!!!!!! Absolutely amazing! Teaching is certainly your thing!
This is the very best explanations of the DCF calculation, great job Jimmy!
you are amazing man , using step by step , and tell beginners from where to get the data ( yahoo ..etc )
,,,, thanks
I cannot thank you enough! You are a great educator, thank you for making your videos so user friendly/ easy to follow/ easy to understand.
Hi Jimmy, I'm so glad I found YOU today. Something tells me I will remember this day for the rest of my investing life. As a healthcare provider, I have no time to perform a true in-depth valuation of a company before investing in it. I've relied on analysts' price targets in the past to make a decision. I look forward to your spreadsheet template to start doing my own valuation. Also, I plan on watching every single one of your videos. Thank you, for all you do!!!!
If you are still looking for a spreadsheet, I made one that follows the video and only charging $5!
Bookmarked for reviewing again and again.
It´s just absolutely nuts how valuable this content is! Thanks so much for it!!
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere???
It’s so useful that I keep coming back to it. Thanks jimmy.
This is Perfect! You explained it well. I'll be coming back to this discounted cash flow video again and again. Much appreciated. I look forward to your website.
Thanks John, I'm glad you liked it.
Very cool. Simply explained and easy to follow. Usually WACC calculation is hard to understand but it's explained super simple here. I think it's good enough for some investors to use this method of DCF.
Almost 80% of my valuation 4 months course in one good and clear video. Thanks mate, appreciate the effort.
What a great explanation man! This is definitely one of the best finantial videos I've ever watched!
Feels like I should be paying tuition for these courses. Can't thank you enough for sharing this content. Super hype about your website!!!
The best DCF walkthrough on TH-cam. Thanks!
Thank you for your videos! Very helpful and well explained!
This video is PRICELESS!!! I really appreciate it!
This was an incredibly dense video, but in a great way. I had to re-watch, compare my data, go back, learn the formula, google the formulas, write them down, come back to it. I learned a lot about terms, how to better read a 10K statement, equations, and built my own excel sheet out of it. I feel much more prepared to do this for another company and would be able to do much faster the next time around. Thanks for putting this together.
Hi, Do you know that how this net borrowings(05:54) has calculated? I couldn't find any information about it.
@@anukaaaa he pulled it from the financing section of the cash cash flow statement. Net borrowings is amount borrowed in the period minus the amount repaid during the same period.
FIN 101 in less than a hour with all the core information and concepts, truly appreciated for your contribution, without asking ppl to join any investment course. I think lots of folks like us will now understand how to evaluate a company or a stock, Thank You !
Currently watching this during university classes because this is just better, and more useful. Thats It,bottom line better. Thank you for your work and selflessness
This video probably covered a semester and a half of my graduate business coursework - good stuff.
I have Business Valuation this semester and I'm done halfway through it, this video helped me piece everything together. Instantly subbed and enabled notifications due to the high quality. Gonna check out the rest for the channel now, hoping everything else is high quality too :)
Dude, you're a saint for putting out all this information for free.
Literally took hours to do my own research and follow along in your example for MMM, just as a test, and came up with a value of $207 using a 1.5% perpetual growth rate. Seems to work for me! Thank you for taking the time to thoroughly explain complicated investing principles
thanks to you I have now built an amazing FCF sheet to evaluate stocks! great lesson! thanks for the immense quality
Amazing vedio i wonder how many times i need to rewatche it to fully understand it
Thank you sir
Great video...you explained it in the best step by step manner
One of the BEST YT videos on YT. Great job, Jimmayyy!
No need to go to Harvard or slog to do cfa. Just absorb this video and you are a star.
Wow I truly wish I had you as a professor, you have the gift of teaching complex topics into layman terms that everyone can comprehend. Thank you!
Thanks for the kind words 🙂😁👍👍
This is one of the best video I had seen for teaching clearly step by step how to calculate intrinsic value! Respect and appreciate your hardwork!
I am pretty sure you are all done with your website, but wow, you put so much efforts for the organic traffic. Very informative, thank you so much!
You deserve nothing but the best for the priceless information you gave us
I appreciate everything you have done!
Thank you so so much
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere??
I’m so Glad I found your channel. To be frank I was a bit skeptical that your channel would be similar to the rest where only theories were discussed without actual or useful examples, or some clickbaity channels. But, you have shown a clear and practical example, with consistent information and in depth analysis. It’s truly a great video. Like someone in the comments said, it’s crazy you are sharing this information out for free and I thank you for that. You have gained yourself a subscriber.
keep up the good work brother , it's prolly the only DCF analysis video lecture that I've hit like on so far.
This is the best video so far I have found on DCF Calculation because I can understand what is being done here as a newbie. Whenever I watch Aswath Damodaran's videos I can sort of grasp the concept of what he is talking about but I can't actually follow him. What I am struggling with though, is how I can estimate a company's future free cash flows on my own without having to rely on analysts' revenue/fcf estimates.
You are such a mensch, Jimmy. Thank you so much!
I usually don't comment on videos but this is a truly amazing content.
This is taught in one semester in Business Schools. Thank you for this great lecture!
Ive now been using this model of evaluation for over a year. The projections have been remarkably accurate for value stocks with healthy Financial Statements. This is not guarantied to work, because there is no such thing as free money. With that being said, it is a great way to identify the risk of a companies current stock price.
Outstanding stuff Jimmy, We appreciate you! keep up the great work.
Hi, Do you know that how this net borrowings(05:54) has calculated? I couldn't find any information about it.
I would love to see more DCF examples! These are great as i get to learn via comparison with you results and debate/justify my decisions :) Great stuff
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere?
Probably best video I’ve seen on explaining DCF’s.
love your style so much, everything clearly explained
I have been educated, amazing
thank you jimmy
Wow this is simply amazing. The amount of conceptual depth and more than that, the ways to apply the assumptions underlying DCF is fantastically explained.
Thanks for all the effort and reasoning behind the valuation. You made our lives a lot easier. This is pure gold, Jim.
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere?
Excellent work. This is the most thorough explanation I've seen on YT.
Very knowledgeable and easy to understand 💪🏼
Thank you very much! for such an excellent video. Blessings 👏
YES MAN, YOU ENDED UP MAKING THE VIDEO ON DCF THAT WE TALKED ABOUT ON YOUR PREVIOUS VIDEO. haha. Thanks brother, you're changing so many new investors lives such as myself!
Thats a really nice thing to say. I appreciate it!
@@LearntoInvest you're a legend / internet mentor in my eyes. Keep up the great videos!
@@marcmini8137 thanks!!! I appreciate the support. It means a ton to me!
By far one of the best videos on youtube i have seen so far, have seen some of your other videos before and never have i been disappointed. Great work in depth, giving intuition for every step. 10/10 video!
I do not come from a finance background, and I only just begun learning about investment. This video is great! I didn't understand some of it but I will work on it to learn this method! Thank you for your sharing your expertise!
Detail oriented and quite understandable! Thank you!
Sorry for writing you, just out of curiosity your page come up on my suggestion friend list so I was just wondering if I knew you from somewhere??
Well, now we know for sure who Van Halen's 'Top Jimmy' is. A huge thank you for all your great content as both as someone new to investing and as an engineering student taking an elective finance class. Top (Jimmy) tier stuff!
This video is such a gem. I'm glad I was able to come across it! Nice way of making complex ideas simple to understand :)