Also called DCF
Discounted cash flow
Valuing a company by projecting the cash it will generate and discounting each year back to today. Everything Angie does is one long DCF.
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Intrinsic value — Angie's estimate of what one share is worth, built from the company's own cash rather than from what anyone will pay. Compare it to today's price.
- WACC — Cost of equity and cost of debt blended by how much of each the company uses. This is the rate every future dollar is discounted at, and it is the single most leveraged input in the model.
- Free cash flow — The cash left for investors after keeping the business running. This is the number a DCF actually values, taken from the most recent fiscal year.
- Terminal value — Everything the business is worth beyond the projection horizon, set by Gordon growth or an exit multiple and then discounted back. It is usually the majority of the answer.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
