Meta is Now a Value Investment at 10.4x P/E after its 67% Decline!

With the S&P down 16% from 52-week highs, the correction in the market is starting to get me excited about stock valuations again and putting fresh savings to work in my investment portfolio. Technology companies have taken a particularly hard hit with the Nasdaq down 30% over the past year. Meta is one such company […]

Microsoft’s Valuation is Looking Attractive after its 32% Decline

With the S&P down 19.0% from 52-week highs, the correction in the market is starting to get me excited about stock valuations again and putting fresh savings to work in my investment portfolio. Technology companies have taken a particularly hard hit with the Nasdaq down 31.5% over the past year. Microsoft has a strong economic […]

Valuing High Growth Companies – A Common Sense Framework

Learning about valuing high growth companies seems almost like an oxymoron. The stock market clearly has two opposing camps – growth and value – and so the idea of putting a valuation on a growth stock can sound heretical to some. But as Warren Buffett once said, “Growth and value investing are joined at the […]

How to Value a Stock With a Reverse DCF (with Examples)

Finding the value of a company matters a great deal; some would argue that it remains the single most important item on anyone’s checklist. Figuring out how much the company is worth or its intrinsic value will help you determine your price and what kind of long-term return you might achieve. Using a discounted cash flow […]

Guide to Terminal Value, Using The Gordon Growth Model

When we buy a company, we dream that the company’s high growth rate will live on forever. Unfortunately, that is not a reality unless you are Amazon. For the rest of us, facing that reality means utilizing a terminal value with the Gordon growth model as our best means to an end. Did you know […]

Explaining the DCF Valuation Model with a Simple Example

Discounted Cash Flow (DCF) valuation remains a fundamental value investing model. Using a DCF continues to be one of the best ways to calculate a company’s intrinsic value. Using a DCF remains the main method analysts use throughout finance, and some think using this type of valuation remains far too complicated for them. In today’s […]

How to Calculate the Cost of Debt

Determining the value of a financial asset is part of the process of calculating the present value of future cash flows. To value a company, we need to have a sense of magnitude and sense of those cash flows, plus any risk associated with receiving that cash. Part of determining the future value of those […]

The 3 Inputs for the Cost of Equity Formula

The value of any financial asset is the present value of its future cash flows discounted to the present. That is the basis of any discounted cash flow model and part of the process for valuing any company. Part of that analysis determines the cost of capital or discounting factor of those cash flows. There […]

Making the Discount Rate Formula Simple – Explain it Like I’m a 7th Grader

To me, one of the hardest parts of understanding a DCF valuation was the discount rate. It didn’t help that the formula was complex. I’d like to make the discount rate simple, using simple words. Maybe if you can understand the basic concept of the discount rate, it will help with calculating one for yourself, […]

Calculating Intrinsic Value with a DCF Like Warren Buffett Would

“Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.”   Basehit Investing These thoughts come directly from page […]