Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Profits who wrote (28715)	2/23/1998 8:12:00 PM
From: Kevin K. Spurway	Read Replies (1) of 1572690

Profits, A good DCF analysis is a very valid way of valuing a company. After all, the market value of a company is equal to present value of future earnings. The problem is figuring out exactly what the future free cash flows are going to be, and at what rate (risk level) they should be discounted. In AMD's case, the volatility and uncertainty of the business makes it damn near impossible to come up with accurate estimates of cash flows, even one quarter out. The kind of PE ratio analysis you're using is a good check on a DCF analysis. In cases like AMD's it might even be more accurate. In any case, anyone claiming to be able to accurately value AMD is, quite frankly, full of sh*t. At best its guesswork and opinion. Right now, the consensus estimate for AMD's value appears to be 20.75. Kevin

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