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.

[@LindaPatricia02]

As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?

[@CarolinaJoseph01]

I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown

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[@panagope]

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

[@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

[@gabrielmm3515]

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[@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.

[@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.

[@TC-KEREM]

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

[@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!

[@Tom-vm2wh]

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

[@JaykeTurner]

The stock market rally started Thursday strong but reversed solidly lower, undercutting the lows of the prior few days. It's a reason to be cautious in the very short term. But the pullback could be setting the stage for another solid advance. Tesla (TSLA) continued to climb Thursday, even though the EV giant pared intraday gains. TSLA stock has now more than doubled from its Jan. 6 bear-market low,I'm still at a crossroads deciding if to liquidate my $238k stock portfolio, what’s the best way to take advantage of this bear market?

[@ArthurLedgeeer]

Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.

[@RebeccaLee-ks4cq]

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[@AlexanderTurke]

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[@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]

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[@williandouglas8140]

+14 08

[@williandouglas8140]

665

[@sugarly69]

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

[@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.

[@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

[@kp-ms9tz]

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

[@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

[@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 🇲🇽

[@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?

[@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. 👍

[@patrickbianconi1817]

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

[@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.

[@ZanasRadzys]

If the stock is overvalued like 20-50% but still has good fundamentals. Is it better just to keep the stock or sell it and wait for a small correction and buy it back?

[@FelixMongeon]

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

[@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 😁

[@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!

[@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

[@ListofSuperhits]

a really superb informative video

[@myway2mars]

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

[@jackcarlos]

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

[@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?

[@vincentvanlierop9267]

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

[@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

[@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 ;)

[@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?

[@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 ;)

[@ArmaniVert]

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

[@Dividendology]

Great visuals and example!!

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

[@Nims2212]

Instead of using free cash flow, would this method also working using the current EPS (earnings per share)? Also how does this compare to the Ben Graham formula?

[@mostafaelbassuony1200]

Thanks for the great video Different platform now provide this as part of their data, which one do you think it’s the most reliable?

[@mwjc5818]

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

[@glcharlie]

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

[@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?

[@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?

[@enisfarje9164]

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

[@davidroussell5118]

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

[@greenparksandblueskies9099]

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

[@paul9303-f3x]

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

[@robjbarnes1]

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

[@sameershaikh-pb9iz]

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

[@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.

[@rlopezgalvez]

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

[@majedaldakhil9082]

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

[@omeriqbal9865]

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

[@danielzuzevich4161]

Your finance flow is epic. 💈

[@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

[@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?

[@Dylanwindellor766]

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

[@donacianoc.sandoval2587]

i am so confused in the last part. when you have the 580 - 790 evaluation, why does that matter in relation to the market cap of 2016? isn't that 580 - 790 the calculated intrinsic value projection for 2026?

[@rewolfer]

How do you choose the timeframe? Or is that just based on your own investment plan? Long term is better, but I assume it's it also gets less accurate as you project further into the future? However, the theory with value investing is that a good business is a good business unless the key concepts change (moat or terrible management)

[@robertagren9360]

This assumption of increased value is that the company doesn't earn a cent while keep itself floating and that inflation will continue forever and we never hit a great depression where money is deflating. For this reason some like to invest on biotech companies 5 year ahead. The company is at rock bottom unable to become profitable while sustain in the market. The market crashes every 8 year that any further long term holding is impractical. It's about grabbing the cash when it's provided. There's no saying how long or little time is needed.

[@RajPatel-vs7fb]

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

[@greyman2623]

I have just one doubt. How did you actually calculate the terminal value multiplier?

[@avelrage]

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

[@mr.jimmeh]

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

[@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.

[@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?

[@ColbyBarradas]

One of my favorite videos

[@bwah8589]

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

[@peerguy]

Thank you for the explanation. Learned a lot and subscribed. I did the calculation of Price / FCF from 2022 to 2018 and noted and average of 34.8%. Is this right? I noticed that you used 10%. Essentially, I calculated FCF from the Oct 28, 2022 - Oct 28, 2018 10-K reports. Then calculated Share Price / FCF for Dec 31, 2022 - Dec 31, 2018) to get an average of 34.8%. Greatly appreciate your input on this. Thanks!

[@rheapabulayan1706]

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

[@josemachado2020]

Instead of adding cash & cash equivalents to the intrinsic value firstly calculated, I would add net debt ( cash & cash equivalents minus short & long term debt). What's your opinion on that?

[@vladbulauchyk4287]

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

[@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.

[@championschool6567]

Since there are no dividends being received, shouldn't the NPV be calculated based only on the valuation of the stock 10 years out discounted back? Furthermore, why would the valuation include the cash and short-term securities? They are not received by the share holder.

[@Eyeamthewitness]

As a newbie investor, where do I even find the information about a company to put it into this calculator??

[@alksandrew]

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

[@bibleuppodcast]

How are you getting 1.15 and 1.1?

[@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!

[@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

[@adityamani9309]

I have a doubt regarding calculation, I should ignore this but for sake of learning please confirm how you terminal value become 1377.02T if the FCF at 2026 is 137.70B

[@sabarishgs7057]

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

[@tajsalaam8850]

Awesome video! Love your channel! I have one question. Why don’t you discount the WACC (Weighted Average Cost of Capital)? Thank you in advance for your response.

[@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

[@abhijitpawar7149]

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

[@offseasonsportscards5644]

How do you calculate for a company having a bad year or two? Do you use their free cash flow from previous years? For instance, Amazon, 2021 and 2022 had negative free cash flow, just wondering how to do the analysis on that. Thanks ☺️ Great content btw!

[@offseasonsportscards5644]

Also, something like berkshire hathaway where they have a year with negative net income this year

[@robertagren9360]

If they gain cash flow it's delayed 1/2 a year for every bad year. Every bad year is a debt.

[@KarloSkvorc]

how do you calculate this if the company has no free cash flow?(looking at Shake Shack)

[@omeriqbal9865]

Can you do an example of 8-k reports calculating the Intrinsic Value?

[@bernfar82]

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

[@pgadam5301]

whats the difference between a 15% growth rate and a 15% annual return. How is growth rate related to returns?

[@delliselite12]

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

[@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

[@xoniau]

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

[@sayandutta5184]

I have two questions, how to calculate terminal value and how to know the intrinsic value of a single share ..!!??

[@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

[@QuickWitQ]

How do you come to 15% for discounted cash flow.

[@sommojames]

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

[@andremooney]

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

[@mathewlark8448]

Stocks are falling and bond yields are rising, but markets still don't seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $150,000 stock portfolio, what's the best way to take advantage of this bear market?

[@mathewlark8448]

Congratulations my daer. You’re really doing well for yourself, I’m 45 and my financiaI Iife is in a mess. Any great tips would really go a long way in shaping my life. I want to buy my own house, that’s really a big flex..

[@mathewlark8448]

please how can get the contact

[@thomasnicole7430]

All these positive comments are encouraging, I want to wake up one morning and find out that my portfolio is $1,000,000. Hope it's possible?

[@dannnsss8034]

@Peter Robbert you're a single mother... named PETER? 🤔🤔🤔

[@rodneyh7693]

scam scam scam

[@dq9405]

How did you calculate annual growth rate for revenue, eps, equity, and free cash flow?

[@gabrielebambi3582]

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

[@faaruqadegunwa1560]

How are you able to draw up the intrinsic value