Warren Buffett Brilliantly Explains Discounted Cash Flow Analysis + Example! (How to Value a Stock!)

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  • Опубліковано 10 лют 2022
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    In this video, Warren Buffett gives a phenomenal explanation on how to use a discounted cash flow analysis to value a stock. We then go over a step by step example on how to perform a discounted cash flow analysis.
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КОМЕНТАРІ • 31

  • @Threecharacterhandel
    @Threecharacterhandel Рік тому +8

    When Warren said “I look at the business and say what..”
    That was very relatable

    • @LancEthan
      @LancEthan 3 місяці тому +1

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

  • @stevendoiron8951
    @stevendoiron8951 2 роки тому +1

    Thanks for this sheet. I did have a quick question concerning the "Average Growth Rate". The value for the average presented is the sum of the four growth rates calculated between the five years divided by five. As there are only four growth values, should the sum not be divided by four to find the average growth rate? Would appreciate if you could clarify. Thanks

    • @Dividendology
      @Dividendology  2 роки тому

      Really the growth rate should depend on multiple factors such as historical FCF growth rates, expectations, industry outlook, etc.

  • @zepedromiranda
    @zepedromiranda 6 місяців тому

    Congratulations on the great content. Would you consider Short term invesments along Cash and Cash equivalents since they are easily converted into cash? I have seen this theory in some Discounted CF Models.
    Thank you once again

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

  • @jamesdoherty9132
    @jamesdoherty9132 Рік тому +14

    2022 Future Free Cash flow. You said, " using our growth rate of 9%". 27455.00 x 9% = 2470.95. Yet you entered 20,000.00? Why?

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

    • @datcajungrl
      @datcajungrl 8 днів тому

      It would be multiplied by 1.9% to increase the FCF.

  • @user-rt6zc2pi6y
    @user-rt6zc2pi6y 2 місяці тому

    Did you apply any margin of safety?

  • @dominicfaison5889
    @dominicfaison5889 2 роки тому +1

    Thanks. Very enlightening

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

  • @vishalb1417
    @vishalb1417 9 місяців тому +6

    Your calculation doesn't make sense to me, why is your Y1 projection for FCF starting at $20,000, instead of $27,455? Please care to explain!

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

  • @irsh2786
    @irsh2786 2 роки тому

    Super nice!

  • @Simo-ho1ml
    @Simo-ho1ml 6 днів тому

    I may be very stupid but I don't understand why a business value is the sum of cash that deliver to you. What is the plan then, buy it and then wait 10 years to have the money back? This does not have a lot of sense. Or is the discount rate basically your return that is included in the calculation of the cashflow?

  • @UnforgivingD
    @UnforgivingD 6 місяців тому

    I am attempting the value a business I am looking out. However the free cash flow is negative some years. when I put for Example $1,180 but the year after lets say -$600 my google sheets gives me a growth of 296.67%. How can I show it to have a negative average for those two years?

    • @user-gy9kz5ll8u
      @user-gy9kz5ll8u 6 місяців тому

      A negative free cash flow is more a qualitative factor than a quantitative factor. What you should do is go through the company’s financial reports and understand some factors that cause these negative free cash flows.

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

  • @shreyassr935
    @shreyassr935 Рік тому +4

    In 2022, how is fcf lesser than 2021

  • @asonyutonny7635
    @asonyutonny7635 Рік тому

    This old man is 💎💎💎💎

  • @zackgilbert3109
    @zackgilbert3109 2 роки тому

    dcf is so underused

  • @tonykollar6870
    @tonykollar6870 2 місяці тому

    How can you project average future growth rate using past performance growth rate? Future is open nobody knows ...I dont understand this logic

  • @willbreece
    @willbreece 2 роки тому +1

    Noice

  • @joshuat520
    @joshuat520 2 роки тому

    ? ???????

  • @mugi1726
    @mugi1726 3 місяці тому

    discounted cash flow is a philosophy. it's kinda pointless when you thrown in into some model and variable

  • @ivanbosnjak9240
    @ivanbosnjak9240 Рік тому +8

    terrible, you did not explain anything

    • @jchargles7492
      @jchargles7492 10 місяців тому +1

      You just didn’t understand he explained pretty well

    • @zhyarjalal4179
      @zhyarjalal4179 4 місяці тому

      2022 Future Free Cash flow. he said, " using our growth rate of 9%". 27455.00 x 9% = 2470.95. Yet he entered 20,000.00? Why?
      @@jchargles7492

    • @LancEthan
      @LancEthan 3 місяці тому

      MEGHAN MAUREEN KRISTENSEN is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..