How to Calculate the Intrinsic Value of a Stock in 2023 (Full Example)

[@NewMoneyYouTube]

Also one thing I should note is that I tend to look at companies with very low/no debt. The third pillar of the Warren Buffett approach is management (responsible for debt management), which comes before you do your valuation. I just checked out a video from Tom that uses enterprise value instead, so if you want to value businesses with high levels of debt and you need to account for it in your valuation check out the end of his video: kzbin.info/www/bejne/mXqbi4acZdOefNU Our method is otherwise the same.

[@1Piecer]

Honestly, Thank you so much. This video will be on reply for many days to come when investing.

[@timstutz9354]

Heii Brandon, It seems to me that your method isn't exactly the same. Because Tom discounts also the FCF from the first Year. If I do the exact same example as you did in your Video with Apple I receive an Intrinsic Value of 690B with the Method of Tom, insead of the 759B you received. I would highly appreciate if you could check that again. Is it necessary to discount the FCF of the first year? Kind regards!

[@Hopexxxxx3]

Hi great video, but i think there is a mistake in intrinsic value , you should also count with the first year respectively a ,,,year zero'' discounted cash flow to determine intrinsic value( so in your case you should add 53,09B to whole number or am I wrong?)

[@TheInvestmentClub]

Hi, I have got a question about the 10 year time span. Why do we always you 10 Years to calculate Intrinsic value? if you hold the company for lets say 15 years, it's intrinsic value will go up. I've spent quite some thinking on this subject and don't really get where the magic number 10 is coming from.

[@bolognaandeggs3004]

Of all the DCF videos I've watched on KZbin, this one is the clearest and best explained video I've seen yet. I feel like you have filled in a lot of the holes i was missing. Well done! Thank you.

[@Financebymahsa]

no mine is better

[@wyelqo]

Excellent video . Can you make 2-3 more videos like this one? To explain with practical examples concepts such as free cash flow, roi, and other concepts so one can evaluate a company.

[@MyExcellentOpinion]

Hamish Hodder Learn by Example Platform does this

[@KEREM-IN-THE-HOUSE]

One word: WOW. The best video I have ever watched about value investing.

[@jamesgrossman78]

This was very helpful. I never heard anyone explain it so well before. This has definitely helped me out when it comes to stock valuation. Thanks!

[@Michael_NV]

Sven Carlin, J Money... Nowadays there are many that do it and provide Excels for free. Brandon is kinda late.

[@Tom-vm2wh]

Watched a couple of different videos on finding intrinsic value and yours is the first that actually explained it in detail.

[@KheroFrei]

One question, please! Is NVIDIA a safe buy to outperform the market this year? I'm tired of these new buys every week, just to make up some assets with a low percentage on my $236k portfolio and try to keep everything around 10%.

[@JasonsHortons]

I've always advised the investors I know to exercise caution when it comes to new buys, especially right now. You should thread the market with the guidance of a qualified specialist or reliable counsel if you don't know where to look.

[@DarnellsStevenses]

@@JasonsHortons The issue is people have the "I want to do it myself mentality" but are not equipped enough for a crash and, hence get burnt. Ideally, advisors are reps for investing jobs, and at first-hand encounter, my portfolio has yielded over 300% since 2020 just after the pandemic to date.

[@KheroFrei]

@@DarnellsStevenses How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?

[@DarnellsStevenses]

@@KheroFrei The beauty of MARGARET MOLLI ALVEY approach is her dual focus: while aggressively pursuing profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.

[@KheroFrei]

@@DarnellsStevenses I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip.

[@shyjumolveerakutty]

The best video I watched on DCF analysis. Clear, crisp, short and complete... nothing more to say. Its ULTIMATE! From here I took 22001 million as the shares outstanding as of 2016 and calculated the share price and got the range as 37.54 - 51.27$ (with hidden treassures included). By considering 30% margin of safety got this price range as 26.26 - 35.91 $. Thank you!

[@gregsoncuellawade]

If you wanna be successful , you most take responsibility for your emotions , not place the blame on others . In addition to make you feel more guilty about your faults , pointing the finger at others will only serve to increase your sense of personal accountability . There's always a risk in every investment , yet people still invest and succeed . You must look outward if you wanna be successful in life.

[@Fatima58191]

The first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional traders.

[@bsquarebuilding]

I trade as a side hustle while keeping my job . I'm tired of trading in losses myself . I've blown my account twice and it's frustrating . I see people making a living out of trading and I want to do same . Please I need help can someone teach me how to trade ?

[@scottjohnson8193]

yeah she does , and in my opinion , it's a huge one and chance for you to change your life with trading .. I just bought my dream Mercedes from last week's profit.A thanks to her expertise.

[@williandouglas8140]

+14 08

[@williandouglas8140]

665

[@robjbarnes1]

Is there an excel download available to help with these calculations?

[@Barbizarre]

thanks for this 3rd edition. If I might ask is this not going against the initial inspiration. Indeed, Warren Buffet and Charlie Munger states that the data needed to invest in a company are: understanding the business, the business is correctly managed by its executives and the price is good (no company can have an infinite price). Here the focus is I guess done on the price of the company. The DFCF method is waiving one important point made by Buffet that is owning the business until judgement day. So it means that there are no intentions to sell and remove the need of a terminal value. His view is more on: "Is 100 dollars invested today going to get me more than 100 dollars soon enough". The more and soon enough being personal choices. Buffet stresses the fact that the price of the stock is unconsequential (except including the comment from Munger that no company have inifinite value). This method is litterally saying that if you wait a market crash some companies become interesting but it is only true in the context of Munger comment.

[@FelixMongeon]

Hands down the best video that breaks down the investment intrinsic value estimation process that I came across. Well done!

[@deadlyshizzno]

I started investing in mid 2021 and since then have watched several DCF videos to get a grasp on that process. At this point I understand it reasonably well, and I had the tab for this video open for over a week thinking "it'd be nice to get a little refresher on that" and now that I finally watched it I can easily say this was the most eloquently and understandably explained version of the DCF process I've seen so far. Thank you

[@sugarly69]

Dude you're a smart and simple guy. You're my new role model now. Thx.

[@ArmaniVert]

11:01 How do you calculate the margin of Saftey ? 30% of 862 is 258 and you got 580?

[@patrickbianconi1817]

So, this is basically the most important video I’ve ever seen in my life…great video, thanks!!

[@jackcarlos]

Bruh I feel like this was a direct response to a previous request comment I left. Appreciate you and this video!

I'd just add that subtracting stock-based compensation from operating cash flow makes a lot of sense too.

[@dzuzr]

Your finance flow is epic. 💈

[@bernfar82]

In a few words, Apple is overvalued at the moment.

[@akaterrific7479]

Can anyone explain the Terminal Value a little more? He mentioned it was 10x, but where is that value coming from and does it change depending on the company? Thanks

[@mesundar]

Thank you for the excellent video. This helped me to understand the intrinsic value better compared to other 10+ videos which I have watched. 👍

[@glcharlie]

Hi could you please explain how you got the 15% return at 11:13 minutes into the video?

[@Dividendology]

Great visuals and example!!

[@pariscasey1678]

Yet another great video 👍🏽 It's just a shame that the comments section on a lot of your videos are being overrun by scammers trying to trick people into going to these phoney "financial advisor" sites. Hopefully people aren't falling for their nonsense..

[@maalikserebryakov]

This video is worse than those comments. This idiot thinks he can predict the future in NUMBERS 😂😂😂😂 “It’s better to be approximately right than precisely wrong” - Warren Buffett

[@kp-ms9tz]

Great video…quick question. How did you look up Price to Free Cashflow of 10 in your Apple example? Thanks

[@henrymichal8522]

Hi Brandon. I have to say that this explanation is the clearest and easiest to follow I've seen. Cheers mate

[@NewMoneyYouTube]

Thanks Henry! Good to see you in the comments 😁

[@mwjc5818]

So how do you compare the intrinsic value to the stock price???🤔

[@myway2mars]

Best video I've found so far on the topic. Thank you

[@gabrielebambi3582]

where can i find the paper that explain the cash flow and payments?

[@Yamahaman888Gaming]

Thanks for this bro. I know you were down about how this one was received as far as the views go but this is high quality content and appreciated very much

[@WPaKFamily]

The funny thing is is that you don't have to do a DCF on AAPL (or any business that you want to invest in in the stock market). If you DCA when you are buying a company's shares of their equity, then over time you have received all of the investment returns from the company (dividend yield + earnings growth) and near 0 from speculative returns (returns that are generated from changes in the PE ratio.)

[@winterheat]

9:48 how come you look at short term asset but not debts? Apple may not have much debt but shouldn't it be looked at?

[@martinrobertson4177]

Great video, Brandon. I also derive much help in my analyses from the Everest Formula analyzer, which provides dashboards with the most important metrics specific to value investors.

[@matthewlandings2435]

I use it too. Very good tool, and the related value investing strategy had massive return over the last years

[@sabarishgs7057]

Very well put together mate! So so grateful to you💯🙏🏻

[@majedaldakhil9082]

one question, why didn't u deduct debt after adding the cash? Thanks

[@avelrage]

Best way to invest. Dont need the money now 😅, I can wait . Thanks for the content always well received.

[@martimmoliveira]

Yoooo amazing content! Had seen your other video (from 3 yrs ago) about intrinsic value and I have honestly found it super useful. This one adds the cash to the business' intrinsic value which is something I didn't know as well. However, the valuation of the company should only be proceeded when you believe it has great fundamentals, and fully understand its business model, right? Thanks for the video dude ;)

[@alksandrew]

Hey, just wondering if there's any ASX screener out there which is good

[@danieleslavabetancourt1501]

Great video! It’s really easy to understand everything, you make it easy. Have some questions, why don’t use WACC, difference between Leveraged and Unleveraged valuation and why don’t discount debt at the end? Greetings from Mexico 🇲🇽

[@ListofSuperhits]

a really superb informative video

[@lilfboy7635]

Im trying to figure out how to calculated apples average price to free cash flow multiple? 6:38 Does anybody understand how he derived the multiple of 10? Maybe im missing the explanation?

[@davidroussell5118]

Very good video and explanation of calculating IV using DCF analysis! Bravo!!

[@greenparksandblueskies9099]

Amazing tutorial ...free piece of gold from Brandon.

[@rlopezgalvez]

Great video, at the end to know the Stock Price, I think we have to Divided the market Cap Forecast / Shares outstanding

[@bwah8589]

6:33 "Around that time, the P/FCF was about ten". How many years do you suppose I should look back? Thank you.

[@theAMAIZIN]

my question is, how do i assume the per-share's market value in 10 years? loved the video, was very clear. but i just need a lil more help ;)

[@林森-b5s]

Great video, thx! one quick question, for your example of Apple, do we also need to minus all the debt it had in 2016 after adding all the cash equivalents in the final step to calculate the intrinsic value ? thx!

[@mr.jimmeh]

So from there do you divide it by the number of shares outstanding to get the individual share price? So based on this example, the intrinsic share price is about $38 per share before MOS?

[@felixpeel3518]

Your discount should be relative to the “risk free rate” not a random return you want to achieve.

[@thehater2091]

Nice video. One thing to add; to get the correct free cashflow, you need to calculate as follow; operating cashflow - payments for acquisition for property, plant and equipment - payments for acquisition of intangible assets.

[@bighands69]

There are a few different mechanism for calculating free cash flow.

[@edwardhandrich6043]

@5:10 your chart shows EPS(diluted) as Billions, it's actually Millions unless you did some math you didn't tell us about. "Revenue" took some time to find, it's actually "Net Sales" on the Statement Of Operations. It would be helpful to explain where you got the numbers and how actually you calculated the annual growth rate. Still, great video. It's getting me a step closer to actually figuring out how to value a business.

[@sameershaikh-pb9iz]

How did you get apple price? To free cashflow as 10?

[@HueghMungus]

Thank you for sharing your knowledge! I don't quite get it yet (I do know how you've explained it), like you know the theory, then you need to put that theory into practice. I've done the analysis on one company stock I bought, I will need to do this on the rest, to really see the big picture

[@Dylanwindellor766]

You have clearly explained the intrinsic value of stock for a beginner in stock markets. Thank you.

[@TheJegergud]

So instead of looking at the individual stock price, you look at the marked cap the business has, when you determan if you want to buy or not ? Because 1 thing is to value the whole business and an other is to value the share ( I assume). Therefore I´m really curious how to do that.

[@faaruqadegunwa1560]

How are you able to draw up the intrinsic value

[@gabrielmm3515]

Is there anything like proof recession stock? I am 58 years and would like help in managing my retirement portfolio which is currently $1.25M...down from a high of $1.67M….

[@CraigMitchell376]

@@Stanleytucci819 Please can you leave the info of your investment advisor here? I’m in dire need for one.

[@KalebWhite816]

@@Stanleytucci819 Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.

[@davidreichert9392]

Think of it like this: when you look at a business, consider whether or not their product is essential spending or discretionary spending for their customers. When a recession comes, people pause their discretionary purchases but continue to make their essential purchases. For example, people still buy food, so grocery chains can be good defensive stocks. Even better, discount stores see an increase in revenue in hard times.

[@erikm9768]

@@davidreichert9392 It's a scam, don't answer on these threads.

[@StephenMackay-g7y]

the links here aren't working for me.

[@michaelr3025]

Thanks for a clear explanation & demo! It's rare to find videos or guides which put this together in a simple manner. @New Money, a question: How would you estimate the value of an ETF? Would you need to check e.g. the top-10 or top-50% of holdings of a fund to understand if the fund is over or undervalued currently, or is there a more straightforward way?

[@replikavr9934]

Great video, very clear and helpful, TY! I just can't figure out how the get from the intrinsic value to the price of 1 share? Divide the intrinsic value by shares outstanding in the starting year? Could it be this simple? Thank you.

[@vladbulauchyk4287]

Even though I had a good knowledge of the discounted cash flow model, I still found the video very very helpful. Thank you!

[@GGG-mn4qw]

hi, great video, thank you for sharing your knowledge with us. I have only one question, which might sound silly but I don`t get it. To calculate a 15% discount you divide the amount by 1.15 and I am used to calculating it by multiplying the amount by the percentage and them subtract that from the original amount, fer example: 15% of 50,000 is 7,500; 50,000-7,500=42,500. while you did 50,000/1.15=43,478 and we get different answers.

[@Dylan-cr5ub]

Does somebody have a great excel spreadsheet for this?

[@sommojames]

I think you should also subtract any outstanding debt when adding value of cash and investments at the end

[@enisfarje9164]

Great Video(s) !!! Where do I get historical data 10 years back, regarding the free cashflow, cashfllow-Price Ratio,...?

[@ColbyBarradas]

One of my favorite videos

[@hwdyeh]

Such a helpful video but i think you may have made some notation errors at the terminal value part, the values should have been 1.377 Trillion instead of 1,377.02 Trillion

[@anonim4611]

thank you for your video, verry helpfull

[@bibleuppodcast]

How are you getting 1.15 and 1.1?

[@andreashofmanner9274]

great video, this is so helpful and easy to understand. do you know any tool or service where the current intrinsic values of companies are calculated?

[@rheapabulayan1706]

Thank you very much. I will need to rewatch it. Is it possible to make another video like this? Thank you

[@iandetert]

I am beyond confused on how to apply the discounts to the free cash flow, I've quite literally tried every possible equation but cannot get the numbers to match yours

[@xoniau]

is there websites that has this calculators built-in into them and can help compare multiple stocks ?

[@mr.jimmeh]

How do you translate the intrinsic value to a share price? You divide it by outstanding shares?

[@wannaknowbad]

Well done!!! Thank you so much!!!!!!!

[@omeriqbal9865]

Just Wondering if it's ideal to do this method on a quarterly report to calculate intrinsic value? or stick with Annual reports?

[@andremooney]

Great video Brandon, i missed this type of content like back in the day!

[@philb6079]

Crazy I just watched your video yesterday on how to value a stock from a year or 2 ago.

[@NewMoneyYouTube]

Time for an update!

[@vincentvanlierop9267]

Is there a good place to easily locate all of this financial information?

[@Someone-lc6dc]

I’m having a really hard time understanding this… How do we apply this method to evaluating the price of a stock we’re buying? And are Graham’s and Lynch’s valuation methods totally different from DCF?

[@GiovanniVecchione_iovis80]

Thanks a lot for the video but there a thing that it's not clear to me. In case a company gives a dividend do you have to include it into the formula? if yes how?

[@RajPatel-vs7fb]

Is the final number you achieved after finally discounting margin of safety considered the intrinsic market cap?

[@foongjianhao5691]

Does this example caculation of intrinsic values works well with calculating growth stock such as Tesla? As Tesla's FCF Multiple is not consistent with a FCF multiple of 809, 580, and 272 for the years 2020, 2021 and 2022, Giving a FCF multiple average of 554 (If my calculations were correct). Im still new to this apporacfh and investment, so dear comment session pls dont be harsh and enlighten me. Thxxxx :)

[@delliselite12]

how exactly do I go about finding the price to free cash flow multiple?

[@sinisarunjic2579]

Awesome video. But there is an error. You use "." as decimal separator. When you calculate terminal value you should put 1.38T or 1,377.02 B

[@cwbresson]

How to connect the intrinsic value with the price of the share to know whether the business is undervalued/overvalued?

[@gregcolon3085]

Excellent Financial Education! Thank you!! My favorite KZbin Finance/Stock Market Channel!

[@wallyg8020]

I like it bro .need to learn more about how to do my own analysis

[@colinferreira4503]

how do you go about valuing companies that have negative cash flow during the past couple of years, but have cash on hand for more than a year? is there another evaluation you can do to find a good share price/market cap?

[@declanlalor7185]

Hi, this is a very good presentation. Thank you. Where is the best free access site to get 10 year financial information on a company including the Free Cash Flow? Thanks again

[@jeremyhoskin7746]

Super explanation 👌

[@RickstersHits]

I'm very new to this whole field and I'm a little confused. Okay I understand that the intrinsic value we got in this example was $826B-$1.13B, but how do we apply that numerical value to actual stocks. How to I convert that value into one share to know if a stock is being overpriced

[@Bjorsky1]

Divide the total intrinsic value by the total number of shares.

[@techsyntax1244]

please make some more example with some more companies

[@Rob-to4mu]

Should the liquid assets be multiplied by the growth formula?

[@rockystaatz521]

You should look at small & mid cap. Good video though

[@mxmus08]

The Apple to free cash flow= Share price as a % cash flow in that year? Great video.

[@paul9303-f3x]

How do you get the price to FCF? Do you just use the average of the last 10 years?

[@IsaacWendt]

great video, but traveling backwards on the monopoly board is just fking with my mind haha.

[@user-pe9qg3hg3k]

this is good for businesses which do not change, but the reason companies such as apple increased it's value is because they innovated and created massive growth that would have been difficult to predict if you didn't know they were going to enter the smartphone market for example