Valuecruncher

Evaluating Coca-Cola with Relative Valuation

If you are interested - we have some interactive valuation tools that cover KO.

www.valuecruncher.com/...

We have both comparator tools and a DCF tool.

What's the Intrinsic Value of Verizon?

That is a completely fair call.

And why we make the model interactive.

Walmart Stock Price Looks Slightly Expensive

Change the terminal growth number if you think it is wrong - you can do that with the model.

Running the Numbers: IBM is Cheap

EBITDA is a measure of profitability that we use as an estimate for cash generated by the business (then adjusted for Capital Expenditure, Depreciation and Tax to calculate free cash flow in the Valuecruncher model).

Reuters provides a EBITD margin for companies - our base case are a reasonable estimate. Below is the Reuters link for IBM:

www.reuters.com/financ...

Running The Numbers: Amazon Looks Expensive

@ Andrew Krainin

I would dispute that 5% terminal growth is comparable to a large industrial.

You would expect an approximate 3% long-term growth rate for an economy like the US. Above that starts to become a material number in a DCF calculation.

blog.valuecruncher.com.../

Running The Numbers: Amazon Looks Expensive

$AMZN grew revenues from $6.9bn in 2004 to $14.8bn in 2007 - a 29% CAGR in that period. Our analysis has the same growth moving forward - growth in the core business and other opportunities (i.e. Web Services). $30.5bn in 2010 is a 28% CAGR from 2007 to 2010.

Our analysis suggests $AMZN is overvalued at current share prices. Even with significant revenue growth projections and a 5% terminal growth rate. Even assuming these growth rates are achieved - the stock looks expensive.

Running The Numbers – Apple Looks Cheap

@ Murphy

What a brilliant call. I love it.

I may need to get t-shirts printed...

Valuecruncher

Running the Numbers: A Five-Minute Valuation of Microsoft

It is a current valuation - today.

If you want to change any of the inputs - for example WACC - you can.
A DCF valuation simply requires estimates of cash flow and a discount rate.

The Valuecruncher model does calculate a net debt figure - so it does look at the cash (and any debt) on a balance sheet.

How to Get Apple to $200

@taojones

We are are valuing the cash the cash generates - that is what a DCF calculation does. The cash on the balance sheet is used to generate revenues and profits into the future - which is what we are valuing. Here is our take on valuation:

www.valuecruncher.com/...

@Scott Parker

As I said - we did value the cash on hand. I agree that modeling innovation is hard. But we think it is worth making an attempt - by looking at the potential cash flows innovation can deliver. Potentially with different scenarios factored in.

@mollytjm

Completely agree that innovation is not predictable. We are big fans of the book - The Black Swan. But from a valuation perspective - we are trying to put some numbers around that process to value companies like AAPL. Perfect - no. Worth trying - we think so.

How to Get Apple to $200

Thanks everyone for the comments. A couple of quick responses.

At Valuecruncher we use a discounted cash flow model (DCF). We are trying to assess the cash a business will produce into the future in determining a valuation today. We have put some assumptions into our analysis - our interactive tools allow you to adjust these assumptions if you disagree. You can then save and share these results. We are aiming to move valuation debate to what we consider fundamental corporate finance. We love the passion of Apple fans.

@205399

I did not state it but our model does factor in the balance sheet - including the US$19.5 billion cash and cash equivalents. We have that $22 a share of cash factored in.

@mychookie2

Our model limits the tax rate to the corporate rate in the country of domicile. We don't let people put in crazy numbers. We might down the track however.

@Bnon

Our view is that the growth rate will likely drop after 2009/10. We may be wrong with our curve - play with our assumptions. Give us your take.

@mrtaxx

Those are target valuations. Ours is based on what we think the valuation should be today. Ours is an opinion - you can play with the assumptions.

@Davewrite

I think that is a good way of thinking about AAPL. That said value still comes down to the cash that a business will generate into the future (in corporate finance anyway).

Finally

@TanToday

Wrote - "WORLD CHANGING TECHNOLOGY CANNOT be modeled"

We disagree - we think it can be modelled. But that is just us.

Thank you again everyone for the comments.

Valuecruncher