TimbaBear:
<I don't think I meant FCF....how do you arrive at FCF?>
As you wrote, thats how I come up with Free cash from operations - (income +depr+amort-capex) Sometimes, the capex is neglected - and it can often be high. For ex. semiconductor companies.
In terms of cost of corporation, I probably would have been better suited to say EV as that is what I meant.
One other point I neglected to mention it that I will sometimes modify EV by subtracting out cash on hand. I dont use current assets per se. because they are often hard to evaluate. (ie for companies like gtsi, inventory may need to be hit with a 0.5multiplier whereas for apparel, it may be closer to .7 or .8) Cash on the other hand is somewhat easier.
As far as discounted cash flows, it is pretty straight forward other than your choice of the risk free rate. For me, I choose to look at my "longer term" debt (mortgage, car etc) and use the highest interest bearing debt as the risk free rate.
Dont know if this helps or not, But if your interested, I will publish a recent stock screen if you like. I am not wholely satisfied with the screening criteria yet, but it is what I am working with now. |
