As a professional investor, I always use a reverse DCF to value a company. It’s the best way to think about valuation. I’ll teach you everything you need to know in this article.
I just wanted to take a moment to express my gratitude for your latest article on valuing companies using a reverse DCF analysis. Without a doubt, it’s one of your best in my opinion! As always, the quality and depth of your content are unmatched, and I can't thank you enough for sharing your expertise with us.
I know I’ve said this before but it’s worth repeating that you have a true gift for teaching, my friend. The way you break down complex concepts into easily digestible pieces is simply remarkable. Your ability to make even the most daunting topics approachable and understandable is something I truly admire.
But it's not just the knowledge you impart that makes your articles stand out. Your writing style is engaging, relatable, and very enjoyable. You have a knack for making even the driest subject matter entertaining, and I find myself eagerly devouring each word you write.
So, thank you, CQ, for your exceptional work. I appreciate the time and effort you put into crafting such informative and engaging articles. You've made a genuine impact on me and countless others who have had the privilege of reading your work.
Keep up the fantastic work, and I'm eagerly looking forward to your next article!
Thank you for posting this article - it’s excellent. I’m still trying to wrap my head around it but a few of beginner’s questions for you:
1. Why do you use the gdp growth as the long term in perpetuity growth rate?
2. With respect to the targeted expected return e.g of 9% - just checking this means the expected growth in share price based on number of current shares outstanding? (Ie it doesn’t take into account dividends etc).
3. Finally - in the final apple example - just want to confirm we are looking at the fcf growth rate the market is pricing in for the 9% return (share price growth) we are hoping to achieve as an investor.
Thanks for the valuable article. Your way of explanation is simple to understand for layman investor.
I'm very sure there are many guys in investor community around the world thankful to your outstanding efforts on financial literacy. Many thanks & keep continuing your journey. I wish you the very best & will be life long student of Compounding quality .
Thank you very much for writing and publishing this most insightful and useful article. It solidifies my understanding and use of both DCF and Reverse DCF, and is written plainly, which I appreciate. I will surely recommend and share this article and your other useful articles with others.
Hi, maybe I am still tired but wouldn't you need to deduct net debt from your Perpetuity Value at the end to arrive at the Equity Value? Or I am assuming you are using a Levered Free Cash Flow? Maybe best then to add the explanation to the article above or people get confused
I want to express my sincere appreciation and gratitude for the incredible amount of valuable tips and informative posts you have been sharing lately. Your dedication is truly admirable.
I have a question regarding the reverse DCF analysis for companies that are not yet generating positive free cash flow. In such cases, would it be appropriate to utilize sales as a metric instead? I'm curious to know your thoughts on this matter.
Thank you once again for your unwavering commitment and hard work!
Hey CQ,
I just wanted to take a moment to express my gratitude for your latest article on valuing companies using a reverse DCF analysis. Without a doubt, it’s one of your best in my opinion! As always, the quality and depth of your content are unmatched, and I can't thank you enough for sharing your expertise with us.
I know I’ve said this before but it’s worth repeating that you have a true gift for teaching, my friend. The way you break down complex concepts into easily digestible pieces is simply remarkable. Your ability to make even the most daunting topics approachable and understandable is something I truly admire.
But it's not just the knowledge you impart that makes your articles stand out. Your writing style is engaging, relatable, and very enjoyable. You have a knack for making even the driest subject matter entertaining, and I find myself eagerly devouring each word you write.
So, thank you, CQ, for your exceptional work. I appreciate the time and effort you put into crafting such informative and engaging articles. You've made a genuine impact on me and countless others who have had the privilege of reading your work.
Keep up the fantastic work, and I'm eagerly looking forward to your next article!
Warmest regards,
Hello
Thank you for posting this article - it’s excellent. I’m still trying to wrap my head around it but a few of beginner’s questions for you:
1. Why do you use the gdp growth as the long term in perpetuity growth rate?
2. With respect to the targeted expected return e.g of 9% - just checking this means the expected growth in share price based on number of current shares outstanding? (Ie it doesn’t take into account dividends etc).
3. Finally - in the final apple example - just want to confirm we are looking at the fcf growth rate the market is pricing in for the 9% return (share price growth) we are hoping to achieve as an investor.
That’s it. Thank you for your help
Thanks for the simple and instructive article. As always great content
Hi QC,
Thanks for the valuable article. Your way of explanation is simple to understand for layman investor.
I'm very sure there are many guys in investor community around the world thankful to your outstanding efforts on financial literacy. Many thanks & keep continuing your journey. I wish you the very best & will be life long student of Compounding quality .
Thanks,
B Nair
Спасибо огромное))))
Очень полезно и интересно!
Great stuff
Great article mate. Very well explained and easy to understand with the excel sheet. Thank you.
Wonderful articles, filled with information, and wisdom. I read every article that comes tome. Thank you.
It will never cease to amaze me how this information is not taught in school.
Thanks for sharing
Thank you very much for writing and publishing this most insightful and useful article. It solidifies my understanding and use of both DCF and Reverse DCF, and is written plainly, which I appreciate. I will surely recommend and share this article and your other useful articles with others.
Hi Compounding Quality, I've been looking forward to your explanation of the Reverse DCF for weeks so many thanks for sharing this.
Hi, maybe I am still tired but wouldn't you need to deduct net debt from your Perpetuity Value at the end to arrive at the Equity Value? Or I am assuming you are using a Levered Free Cash Flow? Maybe best then to add the explanation to the article above or people get confused
What would we do without you???? I hope all the comments are a small glance through the window as to how much we appreciate you. Thank YOU CQ!!!
Thanks for also sharing the Excel templates.
Hello CQ,
I want to express my sincere appreciation and gratitude for the incredible amount of valuable tips and informative posts you have been sharing lately. Your dedication is truly admirable.
I have a question regarding the reverse DCF analysis for companies that are not yet generating positive free cash flow. In such cases, would it be appropriate to utilize sales as a metric instead? I'm curious to know your thoughts on this matter.
Thank you once again for your unwavering commitment and hard work!
Best regards,
S