Ok, here are my numbers if you assume strong growth for 10 years, then slow growth for 10 years:
INTC:
Conservative:
Strong:10%, Slow: 7%
Value: $60
Optimistic:
Strong:15%, Slow 9%
Value: $87
Quote: $75
COHR:
Conservative:
Strong:10%, Slow: 7%
Value: $37
Optimistic:
Strong:15%, Slow 9%
Value: $54
Quote: $37
UTR:
Conservative:
Strong:10%, Slow: 7%
Value: $16
Optimistic:
Strong:15%, Slow 9%
Value: $23
Quote: $24
MCD
Conservative:
Strong:20%, Slow: 7%
Value: $47
Optimistic:
Strong:25%, Slow 9%
Value: $70
Quote: $44
Ok, the picture this paints is less attractive. Is it more accurate? Are estimates of
free cash flow beyond twenty years from now essentially valueless? That certainly sounds more conservative. Maybe we should go further, and only count the next few years of FCF as having value. But isn't that equally a distortion of reality? Certainly the distant future is very murky. But by buying and holding a stock for the long term, aren't we essentially saying that we already believe that this company will continue to be strong and successful many years from now? And if this company is assumed to be both, isn't it worthwhile to see what we'll get if we're right? If we're wrong, and the company performs poorly, the investment will turn out poorly. So buying implies uncertainty, but confidence.
Essentially, we're already counting on those distant earnings to be there. So how much are they worth in today's dollars?
Comments?
Andrew |
