How to calculate the intrinsic value of a stock (template & 10 examples)

[@Value-Investing]

Download the free intrinsic value template here: sven-carlin-research-platform.teachable.com/courses/stock-market-investing/lectures/53594258

[@mosw5]

you need to enroll in the course to download the template?

[@Value-Investing]

@@mosw5 no, it on public preview now, so have fun

[@Michael_NV]

Thank you, Sven!

[@jgsjgs4595]

​@@Value-Investing This is very generous from your side and I feel really pleased. If you visit Valencia the wines and tapas are on me

[@TH-pb4ux]

Very helpful and generous to share this Excel sheet for free with us! I tried it out and according to my calculations Novo Nordisk and Nvidia are undervalued. Can this be true? Could you make another video analyzing those two? I would be infinitely grateful to you! Thanks a lot!

[@afonsodeportugal]

Holy guacamole! This video is a fundamental analysis FREE masterclass! Thank you so much, Dr. Carlin!

[@Value-Investing]

now calculate the intrinsic value of guacamole...

[@d099z]

It's not the first time Sven is going over this. Watch his videos from previous years, lots of wisdom there are well!

[@nvizcuna]

Excellent video, Sven. You are one of the very few people who take into perspective the risk vs. reward for valuations. Keep up the excellent work.

[@Raul19818]

This is what I needed. One of the most useful videos out there. Thanks

[@Value-Investing]

Glad to hear it!

[@ttsen9598]

This is gold! Thank you Sven!

[@ryanh9388]

Very generous of you to give Warren an assistant professorship.

[@baigani0]

top quality video, with high value, one of the best accross youtube platform

[@rishabhnair3789]

you are god's gift to humanity, sven. Thank you and god bless you.

[@popeyeSailor-e5v]

It's been a long time since we've seen this.

[@Value-Investing]

:-)

[@ingapdev]

He usually doesn't mention "intrinsic value" during other videos because it's implicit in his quicker returns estimation. For example, if you know a company will maintain its current dividends and you buy at a dividend yield of 7%, has a 1% buyback, expects earnings growth of 3%, and you estimate inflation at 2%, you can calculate the real annual return as 7% + 1% + 3% - 2% = 9%. This is essentially what you would find with a "precise" intrinsic value calculation.

[@PrasantCroissant]

I'm so happy to see Sven uploaded this video! I always love going deep into a comprehensive video from Sven going step by step especially an hour long one ❤ Feels really like I'm a student and Sven is my professor. Best scenario for me to learn and apply value investment philosophy! Thank you Sven as always 🙏 Does anyone else share this feeling? 😂

[@Artur960426]

Completely agree! I would watch far more Sven’s videos, if they were more often that deeply diving into particular companies. Many times it’s hard to figure whole picture of company potential (or lack of it) from shorter videos.

[@jy2299]

Sven. Thanks once again for helping us make better qualified decisions

[@Value-Investing]

Happy to hear that!

[@christiefamily545]

I love Sven’s assistant!! 🤣🤣🤣

[@DennisdeRuiterrrr]

I don't know about other people but for me i love to watch vdo's where i learn to value stocks in a better way. So this plus whatever matters and how to apply that knowledge in the best way picking companies to buy and when to sell.

[@Michael_NV]

Thank you, Sven! You videos and knowledge sharing are very appreciated.

[@JCTEAM60]

Sven, great video and primer on intrinsic value of equities.

[@gregorygrandison572]

Thanks Sven!🎉 Appreciate your guidance and efforts

[@Dominic_Collins]

Don't simply retire from something; have something to retire to. Start saving, keep saving, and stick to investments.......

[@Jabal_Rasul]

It’s really heartbreaking to see how inflation and recession impact low-income families. The cost of living keeps rising, and many struggle just to meet basic needs, let alone save or invest. It’s a reminder of the importance of finding ways to create financial opportunities. You've helped me a lot sir Robert! Imagine i invested $50,000 and received $190,500 after 14 days

[@Paulão_Albuquerque]

Absolutely! Profits are possible, especially now, but complex transactions should be handled by experienced market professionals.

[@JeremyIsaacBenjamin]

Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Robert Williams Owen.

[@Leif_Grafström]

Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things

[@Tara_Devadiga]

Robert demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit

[@laurauribe5400]

Thank you for su much value in this video and the tools.

[@miskovv1]

insane piece of value right here!!! you should charge us for it ;) doing this for the covered stocks on the research platform will save me so much time!

[@Nemi51500515]

This is a great video. Thank you!

[@dinueduardmadalin2321]

great job Sven! Tks!

[@nadlerb]

Excellent video. From margin of safety perspective I am missing some low probability of very bad events such as dividend cut or cancellation, etc.

[@davidexpr]

Grazie Sven!

[@jonnes__4657]

🗽 WOW, that was really a very long video. At least now we know what not to buy... 😜 .

[@lorenzograzioli6558]

Top video, thank you!!!

[@Value-Investing]

Glad you liked it!

[@marvulishious]

Thank you Sven!

[@TH-pb4ux]

Very helpful and generous to share this Excel sheet for free with us! I tried it out and according to my calculations Novo Nordisk and Nvidia are undervalued. Can this be true? Could you make another video analyzing those two? I would be infinitely grateful to you! Thanks a lot!

[@davidfrankel9267]

Kicking it up a notch. Valuations are very stupid.

[@bnrmth]

Hi Sven. Thanks for such a detailed explanation. Not sure, but in your Google calculation you forgot to adapt the dividend payout ratio to 10%. That changes the result quite a bit. Makes GOOG overvalued.

[@bnrmth]

Oh sorry. I overlooked your correction.

[@Value-Investing]

thanks :-))) I did see it just a bit later...

[@Samuel-bh6ei]

I'm a Bitcoin maxi that is trying my best to understand MSTR. I think it's healthy to explore opposing viewpoints.

[@B-kimber]

I think what you need is a financial advisor assigned by a brokerage company that will trade for you and handle your capital professionally and give you weekly returns of investment without any extra fees attached

[@B-kimber]

I am guided by my advisor, Evelyn Turner.She has de best strategic insights, a daily signal, and optimal returns.

[@seymoursalina]

Whoa...It's quite motivating to see a comment on my tradder, Evelyn Turner; she's an excellent financial advisor. I began investing in crypto because I had the honor of attending several of her workshops.

[@NashSulby-t1f]

Yeah, Evelyn Turner was my hope during the 'bear summer' last year. I made so many mistakes but also learned so much from it, and of course from Evelyn Turner. She is my number one source when it comes to crypto and TA.

[@MarkfGame]

You all know her, then? I had our own house and car, and she made me.She's good. Her succ:ss story is widely known, and I must admit that her approach caught me off guard.

[@Spura83]

Btw what do we do when FCF is much higher (3x) than net income?

[@Michael_NV]

Discount rate that Buffet uses, should be mentioned in Berkshire's annual report. I didn't check the last one but I found it in some previous one.

[@Value-Investing]

send me an email if you find where he says exactly which one he uses, they never shared that...

[@Michael_NV]

@@Value-Investing unfortunately I can’t find it anymore. Let me search more.

[@zenastronomy]

20:29 what is the discount rate? I know what the definition is. but not understanding how mathematically it is being worked out in your sheet. is it 10% per year being removed from your returns every year. so effectively your profit margin?

[@Value-Investing]

think of it as your required return - use 10%, compare to it, and that is it - it allows you to compare potential investments by discounting the future values to the present - which you can compare

[@zenastronomy]

@Value-Investing so effectively inflation. or a type of opportunity cost inflation. I think I'm getting there. starting to understand the excel sheet better.

[@Raul19818]

Thanks!

[@Value-Investing]

You bet!

[@MrMmitsch]

Thanks for going over this. I’m invested in mostly bonds right now. Would that mean my discount rate should be 4-5? If I expect yield to be lower years 5-10 could it even go lower than that? What was a typical discount rate back when bond yields were much lower?

[@MrMmitsch]

Lots of questions. I’m sorry haha

[@Value-Investing]

the yield you will get is written on the coupon - that is it! You can't go predict bonds and interest rates going forward.

[@Paulusmus]

He is the USYK of finance 😊

[@Deepzombie]

Buffet has never used formula to estimate intrinsic value, he had said that many times. Intrinsic value is a great model to understand why a company has a certain value. It’s useless to estimate its future value since you need to know the parameters. But If you know the parameters there is no need to calculate the value, it’s obvious whether to buy or not. It’s not obvious to understand the parameters though, today it helps if you have lunch with the ceo. In the old days he basically screened the market manually then he was rather alone doing that.

[@Value-Investing]

keep in mind the purpose of this video is educational.... few have the investing knowledge that Buffett has

[@drawdescorp]

Thabks, thanks, thanks!!!

[@boyongo0700]

For the google valuation, is there a reason you kept the Dividend Payout ratio at 100% ? Thanks you for this video Sven.

[@Value-Investing]

I changed it a minute later, check with petrobras

[@bumblebee9288]

Can you look at Crocs stock please xxx

[@tieme1700]

Great video. Unfortunately you forgot to discuss Nestle😢

[@Value-Investing]

My bad

[@viktortinglef5194]

38:17 but there must be other value than just the dividend, if the subordinates themselves own things and have low debt, for example, or certain profit is not only used to pay dividends, because then you can't set it up like that writes to learn new things and become wiser very good video

[@Value-Investing]

it is dividend or future potential dividend - if they don't pay dividends, but retain for growth - then that will be reflected in the stock price down the road

[@viktortinglef5194]

I would say that value can be created without the need to pay dividends, but then you are much more dependent on the market recognizing the value of your investment, for example it could be a lot of money on the balance sheet or bringing down a high debt in a company do you agree with that? if this is true, then we can also conclude that it might actually give extra value to get value in the form of dividends, because I am independent of others having to acknowledge my investment what do you think about it?

[@nermin79]

Sven, it is not possible to download the template for free?

[@Value-Investing]

yes, the course is for free, but now I have also set it to public...

[@azulsimmons1040]

Nice lesson. Amazon is such a monster of a company. They probably the most dominant company in the world in one of the toughest markets. I also wonder how you measure opportunity cost of investments which Buffett didn't have to deal with for most of his investing life. This low interest rate environment for the past 20 years almost forces you into stocks for a decent return because fixed income investments like bonds pay so little that they don't even keep up with inflation. So even though stocks are overvalued by traditional metrics, what choice do you have but to push in to them because returns are so low anywhere else. This low interest rate environment must have an effect on expanding multiples in the market.

[@jellyking-vt7su]

Nestle was on the card but not a word was wasted on it. Why?

[@Value-Investing]

maybe I forgot :-(((

[@Value-Investing]

kzbin.info/www/bejne/naendWCjaNyFi7M

[@jellyking-vt7su]

Have a look at Jde Peet’s please. Price under book. Forward p/e expected to be under 10. 4+ percent dividend. What do you think?

[@charlysegaert1506]

Dear Sven, I have a question about the dividend payout-ratio multiplier. For ADM for example you put it at 100%, but the real payout ratio is around 40-50%. They also do buybacks and investments with the rest of the money. So basically you put this into the growth rate? Correct? Then I think a 4% growth rate is very low, assuming 3% buyback yield? That implies you you use stable food prices going forward? Is this correct? Or am I missing something? Also is it correct to fill in a 40% payout ratio in the Excel-sheet and use no growth? That should give the same result? Thank you!

[@Bulruninvests]

Sven could you explain how you decide on the payout ratio. For aapple you used 16% but for google you used 100%.

[@Bulruninvests]

Why is there a difference

[@Bulruninvests]

Sven great video. Would love your thoughts on ANTA. It is an amazing company with an amazing fcf and dividend growth. Trading at a slight premium. It owns 50% of Amer sports and that stake represents 20% of the market cap of the company. Would love your thoughts about the company.

[@PonderDuke]

Some say the method of calculating intrinsic value is different based on the lifecycle stage the business is in. Do you see it like that as well? From start up, established, maturity, exit etc

[@Value-Investing]

you can just also change the inputs and that is it, what best describes the business

[@radosval]

So, in this model, Nestle is a better value than ADM or BRK? I can't decide if Nestle is a mature company that will be around for a very long time, or a business that has reached its limits and is soon going to start dying. If the former, then it will be a buy when PE reaches 15, if the latter, then I am not touching it.

[@Spura83]

Sorry... why did you switch from using earnings per share to dividend per share half-way through the video? I got confused.

[@Value-Investing]

to show how you can use whatever, just adjust the inputs - it should come out equally.... then, just go to what best describes the business

[@zenastronomy]

28:57 i don't understand how you got an intrinsic value of 36? that is a 80% drop in stock price in 10 years. it doesn't seem realistic given apples size and inflation. where you just using it as an example or is there a logic behind such worst case scenario, that i am missing?

[@Value-Investing]

If apple's earnings don't grow, the PE ratio drops to 10 as it was last time there was a decline, that is a value of around $70, the present value of $70 today is $36 :) Sounds crazy, but what can I say I would go insane if I would be normal...

[@zenastronomy]

@Value-Investing oh. so it's inflation adjusted built into the sheet. I think i understand. thanks

[@vincentdenuit2829]

I dont understand why you use the dividend payout ration in the calculator. Is it because only that amount is actually given to shareholders?

[@Value-Investing]

you can sum only the cash you are getting, nothing else. If they don't pay out the cash, it is invested for growth - so it is key not to count things twice

[@kuKubird8963]

What is the difference between intrinsic value and fair value? I thought these two were the same.

[@Value-Investing]

fair value is an accounting term, intrinsic is the focus of value investing...

[@noredbull1]

1

[@bread639]

I like your method . However, it takes into account what the company earns today not would it could earn. That’s where the magic lies . I use FCF and what I’ve found is I look for the company FCF margins and compare it with competitors in the same industry to give me an understanding where the company could be

[@Value-Investing]

that is then included in the growth rates - you can change also the numbers in the subsequent years :-)

[@VapeandJuiceTV]

I think from a risk adjusted value investing perspective. What the company can do is less important than what you know the company does do.

[@dorsho]

SCHD's probablities sum up to 90%, shouldn't it sum up to 100% and then the intrinsic value would be even higher?

[@Value-Investing]

yep!!! my mistake, just correct it.

[@ussul6524]

INTC is for grabs.. someone made offer.

[@explorerjlc1743]

so basically everything is overvalued and high risk including ADM. So just sit on cash????

[@Value-Investing]

there are always risks, it only depends when you wish to take them... and what is your expected return! 5% is better than negative 0% real returns on cash

[@Spura83]

Slapping pretty much any chinese holding I have in there and putting growth and multiple to 5%, p/e 7, 8% and p/e 15, and 4% and p/e 3, in the normal, good, bad scenarios respectively gives me at least 3x on all stocks. With PDD you can go with 0% growth and p/e 7 and it's a 3x of current price lol.

[@jim83213]

Why tf is this free? 😮

[@Pereszczako]

I'm confused. So if Apple didn't pay any dividends (dividend payout ratio 0%), would it be worth $0?

[@Michelle-t5c3n]

As an investment enthusiast, I often wonder how top-level investors are able to become millionaires through investing. I have a significant amount of capital to start with, but I'm unsure about the strategies and direct I should take to help me generate substantial profits like some people are this season.

[@Margaret-x3x]

I’m not in a position to offer financial advice, but given the significant amount of capital you're working with, it would be wise to consult a financial advisor who can guide you in developing a strategy tailored to your goals and risk tolerance.

[@RafaelFonseca-p4k]

Factos!!. After experiencing a major portfolio loss in 2020 amid the COVID pandemic while trying to manage my investments on my own, I reached out to an investment advisor. They helped me turn my $420k into a seven-figure portfolio by providing the guidance and strategy I needed. Having that expertise made a significant difference in my investment journey.

[@RodrigoAlencar-n7k]

Thanks for sharing your experience! I’ve been managing my portfolio myself, but it’s not working out. Do you have any recommendations for a good investment advisor? I could really use some help.

[@RafaelFonseca-p4k]

Nikki Leigh Brooks is a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.

[@Mary-y1o7m]

Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!

[@silentpenguin3001]

Thanks Sven, get some bitcoin bro it aint too late