Dec 29 2008, 12:15 PM
While I truely appreciate your effort in deriving the price of a stock using DDM, I shrugged off looking at the ridiculously high growth rate. That is 2-8x Malaysia GDP rate.
QUOTE(Kinitos @ Dec 29 2008, 11:52 AM)
Obviously you learned crab out of your CFA
Discounted Cash Flow (DCF) best accuracy are obtained by internal analyst as they're privy to inside info. Useful to sectors like properties, construction, oil rig builders.
You hate DCF because you never get it right? Your garbage data input numbers make the DCF screwed big time yeah?
Companies with a poor result from DCF are the best candidates for PN17 awards from BURSA?
A poor DCF result means declining Revenue/Sales or Profit Margin?
These 3 complicated rules every tom d*** & hairy also know
1. Buy a business, not a stock.
2. Buy a business with a sustainable future. E.g. If u have not used its products or services b4, don't bother buying it.
3. Buy it when people are selling or are being emotional....A useful tip is when the business is trading at all time low or historically low PE.
Nothing but a simple minded advice from educated CFA
Agree with you on DCF analysis is best used by internal analysts as they have the best reflection on the macroeconomic assumptions of the industry and the business model itself. What ever the analysis is to derive on a share price, it is arguable. Let me potray an instance, Discounted Cash Flow (DCF) best accuracy are obtained by internal analyst as they're privy to inside info. Useful to sectors like properties, construction, oil rig builders.
You hate DCF because you never get it right? Your garbage data input numbers make the DCF screwed big time yeah?
Companies with a poor result from DCF are the best candidates for PN17 awards from BURSA?
A poor DCF result means declining Revenue/Sales or Profit Margin?
These 3 complicated rules every tom d*** & hairy also know
1. Buy a business, not a stock.
2. Buy a business with a sustainable future. E.g. If u have not used its products or services b4, don't bother buying it.
3. Buy it when people are selling or are being emotional....A useful tip is when the business is trading at all time low or historically low PE.
Nothing but a simple minded advice from educated CFA
DCF analysis vs Multiple analysis (EBITDA / EV).
An analysis on a company using both models will derive to an astounding gap. A DCF analysis is forecasting the profit of a company in future to come. (Mind you, the macroeconomic assumptions are very diffcult to determine in the long-run). A multiple analysis has one component in it, the market capitalization. Looking at the heavy selling on the bourse, one wouldnt agree on using this method, especially the seller.
Now, the disparity will be, the Seller/Acquirer will prefer a DCF analysis as they reflect the best projections throughout. The Buyer will insist on Multiple analysis as according to them, the projection is already reflected in the share price. Who has the ultimate say, will win the deal.
Moral of the story, it is very subjective to derive a current stock price.
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