35. Warren Buffett DCF Intrinsic Value Calculator

Learn more about Preston’s Intrinsic Value Course that teaches you step-by-step how to calculate the intrinsic value of a stock in 18 exclusive videos: www.theinvesto...
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Use the intrinsic Value Calculator at:
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Value stocks with the Discount Cash Flow Intrinsic Value Calculator

[@vimukthaariyasinghe8041]

Watched all the 3 videos series without skipping a single ad..because thats what we can do by our side..thank you for your time contributing to us..learned lot of stuff and never ever get into this much of level without you.. salute you again..

[@marilynspikes]

Welcome back Mr. Pysh, you have certainly been missed.

[@gyanvistaar655]

@@PrestonPysh Don't you think you should compare intrinsic value to enterprise value/share? Comparing it to market price is misleading.

[@Az-jt2zp]

It's been 6 years after you originally put these videos out! I've finally finished going through all of them and it was awesome! I've learnt so much and its been an amazing head start getting all the info from one place so quickly! Thank you so much!

[@sanjeen2503]

Hi. Have you started upon an investment portfolio based on Preston's videos? I finding myself too risk-averse 😅

[@tonycosta3336]

Had you made money on this formula?

[@Az-jt2zp]

@@tonycosta3336 I used on Disney last year when markets dipped and I bought some (didn't have much cash on hand) but so far I've made about 40% so far. I'm still learning but these videos were a really good starting off point for me I feel... Plus they are free!

[@tonycosta3336]

@@Az-jt2zp thanks so this formula works? And hope you continue investing

[@Az-jt2zp]

@@tonycosta3336 well I mean, from my current research and discovery (not as much as most pro value investors) it's just one part, and argueably a small part of it. You could do a DCF analysis on a bad company that's poorly managed with lots of debt it can't service and loose all your money when the company goes into bankruptcy for example

[@michellebeauregard2477]

Wow thank you for sharing! I'm just through 2/3rds of the Intelligent Investor and his strategies didn't sink in until I finished watching your videos. It's more clear now, thanks for the advise, resources and engaging content, I'm more confident as a first time investor. Can't wait to listen to your podcasts on the way to work!

[@iamparadocx]

Okay, so I just got done watching all the three courses and I can't thank you enough. These lessons are gold. You're one sublime teacher. Kudos for the great work! Thank you once again!

[@robertwilson4150]

+Ashish Singh I couldn't have said it better!!! Thank you Prestons Pysh you are making a huge contributions to society!!! Thanks again!!!

[@mayankmittal16]

Bt how do we calculate intrinsic value as for the base he has taken 10 year federal note we are in india and trade in bse what should we take as a base in india

[@imlkr_]

@@mayankmittal16 you can just google "the 10 year average bond interest rate in India " and I guess now it's around 6 percent

[@mayankmittal16]

@@imlkr_ thanks buddy and you are right

[@imlkr_]

@@mayankmittal16 cheers!

[@fraterr]

Hi Preston, your courses have been gold to me! Thanks so much for the effort you put into them.

[@TheFrancisKiwi]

Thank you for all the work you've put Preston.

[@SonoroCreative]

Love this stuff Preston. Big fan of the forum on the website too. Top quality stuff.

[@21Emory]

YOU'RE BACK!! DONT LEAVE US EVER AGAIN D:

[@tonycosta3336]

Does this formula work?

[@MyDreamside]

we can do this for BV, choose a short term growth and then choose a growth perpetual. Since we will see BV in cash only in the end, we discount it only one time. This is ofcourse if we have no dividents.

[@osu122975]

Nice vid. Curious as to why no cash/cash equivalents or total debt taken into account for calculation?

[@tomlonghaymingway9396]

Great tool!

[@vitbicevoid6762]

This calculator its simply amazing Preston. :)

[@lk895]

Hello Preston. at 16:22 mark what is the calculation behind finding the 7376% annual return?

[@candyfloss184]

One question:- don’t I need to really find out the FCF by reading the past annual reports or just assume my calculation is just working fine.

[@nickrudnicki6497]

What about amortization and depreciation? Can you do implement this as well when determining cash flow?

[@MrMusicMuppet]

WHEY!! a new one!!GREAT I'm all excited, cheers Preston!!!!

[@MOHITSHARMADELHI]

Hi, May i know the background calculation behind this DCF calculator. Really appreciate.

[@leowu988]

How do you get the result how much this company may yield (annual return)?

[@leowu988]

anybody?

[@pradeepdarji5407]

Will it search for Indian companies?

[@Matt-xn5wj]

something is wrong with your growth rate calculator it gives off inaccurate number compare to other websites, if you can give me the formula that would be great.

[@shivakanthb]

I have just one question from the Intrinsic Value Calculator , regarding outstanding shares. After i calculate the intrinsic value of company , Does the the Face Value of the stock effect the intrinsic value ? , As the face value of different companies are different ( Some are 10 , 5 , 2 and 1) ? Please help ?

[@tanmaybhargava7138]

no it does not, the market value will automatically adjust its value according to the changed face value of the stock

[@anon12three4]

your website has too much spam

[@jaykiriona]

This is literally life changing, I can't put a price on how good this has been for me - I'll never forget how much knowledge I've learnt from these Preston, so thank you! I wish we could all lobby together and PAY you for this? Would love to be able to donate something to you! Now its time to go back over the things that haven't quite solidified as pure knowledge yet, and start my journey on the stock market. Sincerely, Jay Kiriona

[@tonycosta3336]

Have you made money off of this formula?

[@kevinwint7963]

Now that I am done with all of these videos I can run through my notes and slap together all the pertinent formulas so I know what to look for in a healthy company (at least for the screening process). This series has been phenomenal!

[@tonycosta3336]

Had you made money off this formula?

[@AaronJamesLeeHanMing]

Hey Preston, is there no more "Input Ticket" option on the DCF calculator?

[@nanduteju1827]

Jusk like sir Ben Graham is to sir Warren buffet , u r to me. Thank you for this course.

[@phantbs1590]

The annual return formula, anyone?

[@eddieatum617]

We all thank you... ....your the most effective, ...the most convenient.. the easiest and most simplistic understanding of financial information given anywhere on the internet around the world. Thank you and bless yah.. My entire family are learning all your knowledge and you've made financial education FUN!!!!... you've changed our lives.. very humbling ...and very grateful. Thank you. From New Zealand..

[@tonycosta3336]

Had you made money using this formula?

[@MiguelCardenas-xu2dw]

Just completed your courses, thank you Preston for adding massive value

[@bw5187]

I thought in a DCF investment calculation the discount rate was using something more concrete like the WACC for the company under inspection.

[@adarshzzz]

Watched all 3 series and these are gold in KZbin I have found out. Thanks for this ❤️

[@krasich9]

This whole course if pure Gold, thank you so much. I have assessed many companies, using all the tools and fundamentals that you have taught us, I found the following stock as an interesting option PRU Prudential Financial, using the first calculator I got a 16% yearly over the next 10 years, I used that value using the DCF calculator, and I use only data from 2011 until 2019 due to COVID-19 impact, according to the DCF calculator this company may yield a 37.69% annual return, is my assessment accurate? or I am missing something that could lead to this high return. Regards,

[@richardsalley9848]

This is okay. But I don't understand why you don't go ahead and share the formula you used to calculate your "Discontinued perpetuity cash flow value", especially since it's an easy formula to understand. I'm assuming that you used the standard perpetuity formula of: ( FCF * (1+g) ) / (d - g) where g = terminal growth rate, and d = discount rate. According to the numbers used in you example here, you used 3% for your terminal growth rate, and 10% for your discount rate. But the big question here is, what discount factor did you use on your "Discontinued perpetuity cash flow value"? Because if you used the discount factor of 2.59 (like that used on the 10th year value of FCF), you should have got about $93,177 which is a bit larger than the $90,773. Did you use the wrong discount factor in your calculator?

[@ROC4Life96]

Where can I find a stocks financials going back 10 years (ideally, for free)?

[@arindamsar5547]

In companies investor relations options

[@robimgabriel8063]

Sec.gov

[@jordanhe7509]

Morningstar can provide that information.

[@vidya014]

Try an alternative simple way: Settings: Owner's earnings per share based. DCF year is proportional to CROIC. CROIC = 20%, means 20 years. Growth = 0 and Discounted Rate = 0 because they are taken care of by CROIC.

[@ajaykishan2183]

I have a question here, I get DPCF of 93,174.24 by using this formula (last cf estimated) * ( 1 + perpetuity rate) / (discount rate - perpetuity rate) which is (6332 * 1.03) / (0.10-0.03). Can anyone please explain how preston got 90,773 here

[@MyDreamside]

what if the growth rate is lower than inflation, i calculated coca cola , with average growth rate in short term 1%, that's how much the net income increased per year during a 10 year period on average. Shouldnt we instead detract inflation? if cash flow increases 1% per year and the inflation rate is 1.5 we actualy loose money. So what you say in 13:07, if the company follows inflation we should put 0 as a long term growth. Correct me if i'm wrong

[@saltlordbros5278]

Did you find the answer to that man?

[@loveanimals-0197]

Totally wrong. 1. You either don't know what a discount rate means, or don't know how to explain it. I'd guess the former. 2. If you grow at 3% till INFINITY, then you will end up with INFINITE dollars. That's just a mathematical certainty. So, your BS calculator is BS. Thanks.

[@mayankgarkoti6977]

Hi Preston, Very NIce video. There are a some doubts What should I enter In point 6(Shares Outstanding) if i have for example 2.31 crore and 42.41 lacks in shares Outstanding?

[@PhilippPogosov]

So, how does he discount it? DCF formula have WACC that include beta, so does Buffett and other value guys use it the same way like academics?

[@rolandoborriceli8823]

This is bullshit :D try this m.kzbin.info/www/bejne/nJXClqCCgd99pM0

[@JJabbarov]

I understand that past FCF can be unstable and, therefore, it is difficult to put the right growth rate of future FCF to DCF calculator. But, are we justified in using the growth rate of net income...? At the end of the day I want to calculate the sum of FCF over the next 10 years and discount it back to the present day. And if company continues to deliver unstable FCF without much growth - that should be factored in in DCF - not the positive growth of net income. Do you agree?

[@pauljoshiva]

HI Preston, Why $WMT growth is negative -1.39 now and How to calculate DPCF for this one?

[@irakli1264]

When evaluating AAPL data, DCF model calculator gave the intrinsic value of $645, whereas the book value based calculator only $145. In both cases prospected time period was 10 years. I get that intrinsic value is highly subjective, but what about such a huge difference?

[@LW4816]

Thank you very much for making these videos and providing them to us for free! I just finished Cardiology training and was looking at ways of investing my income. They don't give us any education in financing and I feel your videos gave me a nice background to work from. Thank you!!!

[@gruminatorII]

i think the way the discountet perpetuity cash flow is calculated its the same way than the discounted future cash flow but not for perpetuity but for the 10 years after the first 10 years am i right ?

[@mrzombiesbo]

Does anyone know how the DPCF value is calculated? Can't get it to work in Excel

[@IdealPerspectiveVision]

Sorry but I wanna ask you about the info that you take from morgingstar you did take the financial earnings not the owners earning right ?

[@popohammers9095]

the discount rate is what your expected annual return? How to accurately assume that number? Can you explain further

[@balkrishnatamang8567]

Hi Preston, Can we not enter owner's earning per unit instead of what you do in DCF calculater?

[@s.m.meherulalam3540]

What benefits for using the Book Value Intrinsic Value calculation

[@kdfunchannel8084]

Just finished watching all of the courses. Thank you for all the knowledge!

[@MartialWaves]

Thank you for all of this information, I really appreciate it.

[@valezkaocando1908]

Hi Preston! finished the 3 courses! and can't thank you enough for your enlightenment!! also grateful that people like you exist!!

[@Isaac-hs3bj]

Preston i appreciate this being for free. Thank you

[@davidcitra3581]

thank you so much for all your hard work to provide us with free courses that helped me so much. God bless you..

[@naimmazmi]

Awesome! That was a lot of things to go through. Thank you for sharing your knowledge with us.

[@jordanroberts7931]

When do I use this calculator over the other one in course 2? Or should I be using both all of the time?

[@drmsgp]

Hi, I got this quote for AMTD The intrinsic value per share is $45.36 at a 11.00% annual discount rate Based on the cash flows you have forecasted and a market price of $38.07, this company may yield a -146.80% annual return what does the - return mean at a lower price ?!

[@miro2189]

Please may I ask? On which website one can find an efficient, free way to find a company's past book value per share stats over the past 10 year period. Any help would be great. Thank you😊

[@asyrafjalil3506]

Thank you so much, the course helped me alot.

[@VS-ic3by]

preston which calculator is more precise?

[@alishertlebaldyyev]

Thank you very much, Preston! Courses are really nice. However, I found a mistake in the last #35 lesson. The sum of DFCF is not right and it is not in the current calculator on the website, too. Maybe I am confusing something, but I summarised DFCF couple of times and it always shows a little bit different number on the website. If I am wrong, can you tell me why the Sum of DFCF is not accurate. P.S. I wanted to ask a question on the forum, but I have not found any options to start a discussion over there. Thank you for the attention

[@arentube8123]

The web resources that I have found say that free cash flow is different than Owners Earnings. Depending on the type of company, they can be very different. So if I can calculate both owners earnings and free cash flow, which should I use?

[@heshamk4824]

deep down from my heart , Thank you Sir

[@brandsafetychris2215]

Hey Preston, for the company I'm researching the average growth rate calculated was negative..I received an error when I tried to continue, so I just kept it at the default 3%..can you explain what to do in a circumstance like this? I just want to make sure that what's being input into the calculator is correct. Thanks!

[@DVS1N50MN1AC]

How'd you get the DPCF calculation. I keep getting a different number. It's doing my head.

[@rexinferi]

How do you get the sum of all the numbers added into infinity(perpetuity)? Doesn't make sense to me? Also I don't understand the point of the Discount factor? and discounting the FCF? When in the end it just tells you which price will yeild you your desired return(discount rate)? What is the point of looking at the discounted future cash flows? (discounted by your desired annual return??)

[@deelee8535]

I would love to thank you for these 35 lessons. I have learn so much about how investments work. I am now able to investments intelligently.

[@krystarise7021]

I used the calculator and this is what it said, The intrinsic value per share is $48.17 at a 10.00% annual discount rate Based on the cash flows you have forecasted and a market price of $58.73, this company may yield a 8.78% annual return. I would like to know if this is a good number.

[@joed1755]

Preston thank you very much for taking the time and creating this video series. I am very grateful for having you as my teacher. Your style is straight forward and easy to understand. There is Jewish proverb.." Save one life and you saved the whole humanity." I feel like you have done that more than once... Thank you again for teaching me how to fish... Good luck in everything you do. Happy New Year

[@Sebbipanza]

I hope you see this question = ) Given a company has negative income the present year the calculation will only calculate with positive numbers as I see it. What should one do ? = )

[@tanmaybhargava7138]

Hi Pysh, thanks for the all the videos, its been really helpful to me. Also I have question for you, I'm new to investing and while analysing the stocks i have realised that there are a lot of companies that are doing extremely well but when i look at their free cash flow, it's negative year after year and for every year. How do we estimate the worth of such a company and is there a way to calculate the intrinsic value for these companies ? One example is HDFC in the Indian market. Can you please comment on that, would appreciate it. Thanks in advance.

[@domesticateddad-mr6pk]

I love this, thank you for this video, I’m currently reading your warren Buffett accounting book, excellent stuff!!!

[@kamalakannangunalan]

Thanks a lot bro This is great and I watched all your there courses you are able to make things simple and understandable.

[@frankrockstar4209]

Best videos ever .. thumbs up if u r watching this videos during codvid 19 pandemic

[@vetiarvind]

Rather than net income, i think it makes sense to use the book value per share of the initial period to the final period and then add all the dividend payouts in that period on top of the difference of the book values to get the total amount of growth that we've seen after operating expenses is taken into account.

[@freethemz]

Thank you so much for sharing this useful data! Greatly apprecaited.

[@brutismaximus1]

Thanks so much Preston. The entire course was amazing with plenty of eureka moments. I look forward to reading your books now.

[@MrMRgewoonrobin]

it toke DAY'S !!!!!!!!!!!!! to get the math.... I really hate you for that... but also thanks man

[@RamiSobhani]

I hope preston sees my comment

[@yousufkhan6403]

Thanks for this great video series(Y) . Your calculator is excellent and easy to use tool but there's one issue that its not accounting for negative net income percentage as currently we have -1.07% for WMT

[@Spunk990]

I have read buffets books and intelligent investor...but never understood the value concept properly..but after watching all your vedio now i really understand what value investing is...thanks a ton for sharing your knowledge in such an easy way😄😄

[@sonnesonne6828]

Hie Preston! Lesson 1, there is a part you mentioned that after Buffet has bought stocks of a company. Later he gets money month in month out from every profit of the goods sold, are you able to explain to me what you meant there, Thanks!

[@subhankar2806]

Sir will you please add some more currency option like (rupees ...as m frm india) in your calculator....please....

[@hussain935]

it is a great video. cleared my concepts. Thanks from Pakistan

[@rubenscpersonal]

Not bad! This is 2017 and Walmart Free Cash Flow is: 17.93B

[@needviola]

Dear Preston, Do you think that the DCF value method is more accurate than the Book Value per share method?

[@needviola]

According to dcf aig is a huge bargain, however 2008 technically makes it ineligible for your warren approach. (Due to the hug instibility in the past 10 years) That being said, was 2008 just the right kind of "fear" that would entice warren to gobble up a company like aig.

[@needviola]

Sorry to ask a specific question. I just cant figure it out. Thank you so much for all your info. You are a blessing.

[@needviola]

Thank you#!!!!

[@ReyPeon]

Hi, do you know why the 10% discount rate?

[@MuradinsLootship]

vintagevalueinvesting.com/how-to-determine-a-discount-rate/

[@manu93ize]

dose this work if starting free cash flow number is zero or negative number

[@Ray-hx4dz]

Hey Preston, I watched your all 3 courses. They are really nice teaching! I learned a lot from these classes. Thanks you very much!

[@tonycosta3336]

Had you made money using this formula?

[@Ray-hx4dz]

@@tonycosta3336 Yea Man!

[@tonycosta3336]

@@Ray-hx4dz Oh wow so would you recommend this formula or would you recommend a different one? Thanks for answering my question just wanted to know if this formula works thanks

[@Ray-hx4dz]

@@tonycosta3336 I would only recommend this DCF method!

[@tonycosta3336]

@@Ray-hx4dz thanks again for answering seems like people agree this is a good intrinsic value I will definitely use!

[@yackovbanash2854]

Hey everyone I know I'm late to the party my question is which site to use to research financial becouse msn money is clearly not as good as it looks like in these videos and 2nd which stock screener is good becouse I cant find the google one

[@MrWinstonyap]

Dear Mr Preston, I would like to ask that based on the above calculator, the above showed is RM 90773. However, based on the formula of perpetuity cash flow value = Cash of last year X (1+ perpetuity growth rate) / ( Discount Rate - perpetuity growth rate). Then, it would be RM 16401 X 1,03/ ( 0.1-0.03)= 241329. After that, we discount it to today value. 241329/ (1.03^10) = RM 93177.22. So, now I am headache where I got the wrong formula, or any things I miss out. Really need your advice.

[@WarriornM]

Hey! Did you solve it? I can't get my head around the formula

[@aaronbarber6816]

In your initial formula, you should use 6,332 not 16,401. I think the difference in your final answer is caused by rounding errors. You got the right formula

[@jethrolim7664]

by far you are the best been watching gurus here in the philippines and it's really hard to trust them

[@ABCTEST213]

OMG, morning stars don't provide outstanding shares number now

[@jasonlobasso9868]

when calculating the average growth rate, whats the actual formula? besides using the online calculator.

[@sanalattuveappil]

Thank you all these lessons are of great value. Can you make a lessons on security Analysis?

[@45138449]

Preston all your courses were very helpful and easy to understand! Thank you and congratulations!

[@wuhaowz]

Thank you very much! I watched your videos, read your books, saved your website! I will ask my wife do the same thing again. and we are going to head to stock market!

[@satyamverma1060]

hey so would you like to share how useful this course was and how much money you actually gained by using these techniques

[@jreinhard96]

Hi Preston Pysh, just finish your 3 courses, thanks for the sharing. See u on top