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Tagged: Intrinsic value

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Hi Preston & Stig,

Thank you for the amazing free course, you have explained the topics in a very lucid manner.

I have presently just finished the Course 2-Unit 3-Lesson 5 and have a clarification on how the intrinsic value of Disney was arrived at. I am using the same values given in the course and tried to implement it in a spreadsheet and got an value of 40.03. I have explained below as to how I have arrived at the value of 40.03…

Based on current BV of 21.21 and rate of growth of 6.924% per year, the BV after 10 years = 21.21*(1+6.924/100)^10 = 41.4278

Taking a constant dividend of 0.6 per year for next 10 years, total dividend after 10 years= 0.6*10 =6

Total projected earnings after 10 years = 41.4278 + 6 = 47.4278

Considering a discount rate of 1.71 per year, for 10 years the discount factor= 1/(1+1.71/100)^10 = 0.844

Present value of future earning = 0.844 * 47.4278 = 40.03

Using the calculator in the buffetbooks, the intrinsic value arrived is 40.439

Am I missing something in the calculation? can you please help me to understand.

Many thanks,

JeyanthJeynath,

Thank you for the support!

This is a thread for The Intrinsic Value Course: https://www.theinvestorspodcast.com/product/intrinsic-value-course/

Please post your question in one of the other topics or better yet create a new. The TIP community will get back to you.

Thank you!

-Stig

Price is what you pay. Value is what you get. - Warren Buffett

Hi, Stig

I’m Euclid from the Philippines and is currently studying the lessons from your website. In the intrinsic value calculator, you are using the 10 year federal note for the discount rate. Is this applicable to all currencies or market like here in the Philippines? If not, what variable should I look for? Thank you.

Regards.

Euclid

Euclid,

Yes, it is applicable.

Please note that this is the thread for The Intrinsic Value Course: https://www.theinvestorspodcast.com/product/intrinsic-value-course/

But please feel free to post it anywhere else on the forum. Welcome!

-Stig

Price is what you pay. Value is what you get. - Warren Buffett

Module 2 of the Intrinsic Value course gets confusing for me. Especially IRR.

Is there a way to overall summarize each video below with texts/bullet notes, the way it’s done for the Intelligent Investor course – as an extra way of simplifying/reinforcing concepts?

Stig,

I recently evaluated stock “BBSI” using the intrinsic value calculator provided to the students who paid for the course. That calculator told me I will make 26% IRR using future free cash flow data. I then used the free intrinsic calculator on buffetsbooks.com and it told me the fair value of the share is 20.92. The current value of BBSI is $60.75. How come one calculator tells me my IRR is 26% but the other calculator is telling me the current stock price is overvalued? Sorry if the question sounds confusing. I’m just trying to practice researching stocks that have a low TIP value. This value is 0.87. Thank you!

@John,

Thank you for the feedback!

@Noah,

Your question is not confusing at all.

Did you use the same assumptions?

-Stig

Price is what you pay. Value is what you get. - Warren Buffett

Stig

Nevermind I figured it out I needed to find out the NPV of the stock using the future cash flow for the next 10 years and dividing that number by the shares outstanding. That gave me the intrinsic value of 1 share of stock

Hi Stig,

Thank you for all your help.

I have another question.

I have tried finding information of the economic moat in the annual reports of various companies. Sometimes, I find it difficult to find the information of the economic moat in the annual reports of various companies.

Can you please tell me other sources or websites, where there is relevant information of the economic moat of various companies?

Cheers,

NeelNeel,

That is such a great and also difficult question to respond to. It’s not quantifiable which makes it that much harder to work with. I don’t have a good resource other than the financial reports and even more important speak to the people (scuttlebutt) who knows about the industry.

Another option is to read analyst’s reports to learn more about the qualitative factors, and then take it from there. I would not trust the analysts too much, but they might say that “these three factors are important” in industry X.

Happy researching!

-Stig

Price is what you pay. Value is what you get. - Warren Buffett

Crazy question, but I was wondering what calculation you used to figure the Average Book Value Change (ABVC). I went to create a spreadsheet that I could access anytime but was unable to recreate your percentages in the ABVC. So my understanding on how to get average percent over a certain period of time is this. Take the Current Book Value (CBV) minus the Old Book Value (OBV) and divide this by the OBV then multiply by 100 . This will give you the average percent change in that time period. You should do that for each period (one year in this case) then add those periods together and decide by the number of years.

I have used this calculation but I have not come up with your (ABVC).Thank you for your time.

Thank Stig, for your help.

Neel

im trying to use the msn money page to look into the history, it seems to have changed since the intrinsic value lesson was filmed. Is there a site thats good for finding the 10 year history of EPS and book value? the msn money page now seems much less in depth

Hey,

I want to start practice and to try to calculate the intrinsic value of some companies. I’m using Yahoo Finance and I can’t get the 10-y information- EPS, Book Value and Dividends.

What source can I use to find this information?

Thanks

Guys,

I would use Morningstar.

Thanks!

Stig

Price is what you pay. Value is what you get. - Warren Buffett

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