I think there may be something off about the DCF I built because it's unlikely that Costco is trading that much of a premium to intrinsic value. My guess right now is that the CapEx and net working capital figures may be too high which affects the TV a lot. Had to leave for class so couldn't figure it out during the stream but will make an update video after Costco's earnings (this Thursday)! Also be sure to check out moomoo down below for up to 15 FREE stocks! Offer ends on 9/30/22. Why say no to free money? ► j.moomoo.com/00i9Kz
Love your videos I believe if you made a video about how sell-side analysts build their projections and estimates, what the tools they used etc.. will be very interesting for a lot of people out there. Moreover, aslo if you can do different industries such as FIG, mining or Oil and Gas. Best of luck
You calendarized the DA and NWC incorrectly. Costco is already in FY23 so you need to take 1/3 of 2012 and 2/3 of 2013 for CY 2013, etc. So FY22 would be 1/3 of 2021 and all of 2022 at this point in time.
You are discounting the FCF back to the valuation date. However, you still discount the whole year´s FCF, which includes historical, and already realized figures.
Hello Rareliquid, I have a question about the calculated taxes. For the Unlevered Freecashflow, is it not assumed that there is a hypothetical full equity financing, since we want to eliminate the effect of the tax shield. If we set the taxes as a function of EBIT, then we would include the tax shield. The effect of the capital structure is only taken into account in the WACC method, isn't it? Thanks a lot Best regards from Germany
Hi Rareliquid, Love you videos and content very comprehensive. I am applying to military transition programme this year in the UK any tips, such as where would military types fit into. I have a strong background in Programme management, delivering training and have a lot of analytical skills too with experience in the DEI environment.
Depreciation 2021 is off due to the fact that you are missing 2022 depreciation data. Your 2021 depreciation consists of 1/3 of 2022 depreciation, but you do not have that.
yeah so, you're trying to use a DCF to value a real estate + Wholesale business. You literally left the most valuable parts of the company out of the stock price estimate.
I think there may be something off about the DCF I built because it's unlikely that Costco is trading that much of a premium to intrinsic value. My guess right now is that the CapEx and net working capital figures may be too high which affects the TV a lot. Had to leave for class so couldn't figure it out during the stream but will make an update video after Costco's earnings (this Thursday)!
Also be sure to check out moomoo down below for up to 15 FREE stocks! Offer ends on 9/30/22. Why say no to free money?
► j.moomoo.com/00i9Kz
Love your videos
I believe if you made a video about how sell-side analysts build their projections and estimates, what the tools they used etc.. will be very interesting for a lot of people out there. Moreover, aslo if you can do different industries such as FIG, mining or Oil and Gas.
Best of luck
You calendarized the DA and NWC incorrectly. Costco is already in FY23 so you need to take 1/3 of 2012 and 2/3 of 2013 for CY 2013, etc. So FY22 would be 1/3 of 2021 and all of 2022 at this point in time.
⏱Timestamps⏱
0:00 - Introduction
0:30 - Agenda
0:54 - Costco Situation Overview
5:34 - moomoo
8:04 - Gathering Historical Financials + Estimates
34:50 - Building the DCF
1:00:02 - WACC
1:14:40 - Mid-Year Convention
1:25:24 - Price Discussion
I think you're yearfrac function is funky, there are 101 days left until next year
Thanks a lot! Can you please make a video on, which cell should we fix and which not? It always difficult to understand
1:17:23 very useful !
Hey rareliquid, thanks for the video! In the latest Costco balance sheet I'm seeing $11bln in cash instead of $1.8bln which may be worth looking at.
Hi! can I ask you what software u use for recording the screen with your face in it as well? :) I love these long versions of DCF's btw.
I think he is using Loom
Thanks for the video! Do you think you could build a DCF for a company like Lululemon?
Can you do a 3 statement model video or an LBO video? Loving the content as always.
You are discounting the FCF back to the valuation date. However, you still discount the whole year´s FCF, which includes historical, and already realized figures.
I think the change in NWC should be an addition to the FCF, not subtraction?
Hello Rareliquid,
I have a question about the calculated taxes.
For the Unlevered Freecashflow, is it not assumed that there is a hypothetical full equity financing, since we want to eliminate the effect of the tax shield.
If we set the taxes as a function of EBIT, then we would include the tax shield. The effect of the capital structure is only taken into account in the WACC method, isn't it?
Thanks a lot
Best regards from Germany
I agree. I noticed he does that he all his DCF valuations and wondered if there was any rationale for that.
Could you do a DCF valuation of AMD next? :)
Hello Man..What do you think about Nu Holdings? Thanks for all the info
Can you make a video on connecting the 3 statements from previous videos?
great, looking forward for your update :), thank you! How about covering ADM ? Secular food business ... cheers!
Thank you for the detailed info sir!
Hi Rareliquid, Love you videos and content very comprehensive. I am applying to military transition programme this year in the UK any tips, such as where would military types fit into. I have a strong background in Programme management, delivering training and have a lot of analytical skills too with experience in the DEI environment.
Love the content man. Can we get an LBO model and an M&A model with cash waterfalls and the whole thing
PV FCF 2022 seems to be incomplete. It's missing the FCF earned YTD of $1592.58
@rareliquid where are you learn all of this ??
Hello guys, can someone tell me why the cost of debt is calculated by taking interest expense/EBIT?
Thanks!
can you do one for planet fitness
You never considered Costco paying dividend to shareholders. dividend paying companies must be valued differently
The people in the chat joking about shorting COST, but since this video was published, COST has actually fallen. I agree that COST is overvalued :-(
Dude, you're assuming you did something wrong but the stock is just egregiously overvalued
Costco has way more cash than what you have......like 11bn
Depreciation 2021 is off due to the fact that you are missing 2022 depreciation data. Your 2021 depreciation consists of 1/3 of 2022 depreciation, but you do not have that.
Same for Change in Net Working Capital, you miss the 2022 data. Hence, part of your 2021 is missing that 1/3 of calendar year
Nice catch, he did not fully calendarize 2021
This is way DCF doesn't work too many variables.
yeah so, you're trying to use a DCF to value a real estate + Wholesale business. You literally left the most valuable parts of the company out of the stock price estimate.
Costco will always be overvalued, I get a price of $323 with just free cash flow.