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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (40832)	12/27/2010 6:52:16 PM
From: armi	Read Replies (1) \| Respond to of 78842

Hi Jurgis, Lets get away from the stereotypical 'DCF' name and just call this a 'calculation'. How I do it: 1) Figure out the growth rate of a company by using historic fundamentals. 2) Determine what's the remaining life of the company. (I need to find a way to determine this) 3) (I use Owner's Earnings, FCF works well too!) Starting from the most latest Owner's Earnings, multiply the Owner's Earnings by what you predict will be the growth rate will be in the future. You do not need to multiply it by (A). I would strongly suggest against multiplying it by (A). C) Do what you did with C but multiply it by a known fixed rate (ie. 30 Year T-Bond) D) Subtract it and you have 'excess cash' E) Discount the 'excess cash' by what you want to earn. F) Add up all the 'excess cash' discounted. G) Divide it by shares outstanding (I need to fix this too. I can't keep pretending there will be the same amount of shares forever) This will be the Owner's Earnings Per Share. H) Multiply it by a historical Owner's Earnings/Share multiple. Are we good (: ?