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DCF Calculator Fair Value vs Projected FCF Intrinsic Value
Posted by: junyangkao (IP Logged)
Date: January 1, 2014 09:02PM
Dear friends,Forgive me for such a newbie question.I have been using the greenbar under each stock's summary tab which used to be called "Intrinsic Value" to guide my own valuation of the tab.I noticed its been renamed Projected FCF recently. When I use the DCF calculator under the DCF tab I get vastly different quotations for Fair Value as compared with the Projected FCF (what was previously termed "Intrinsic Value".For example, for IPAR, the Projected FCF value is 21 while the DCF calculator gives me a value of > 112 (with discount rate of 12%).Even with more conservative discount rates, the DCF calculator fair value is way more than the projected FCF.Can I ask:1. What is the difference between "Projected FCF" (previously called Intrinsic Value) and the fair value quoted by the DCF calculator?2. Which one should I be using to calculated a buy price for a stock?Thank you!
Re: DCF Calculator Fair Value vs Projected FCF Intrinsic Value
Posted by: gurufocus (IP Logged)
Date: January 4, 2014 08:39AM
Please read this for explanations:
DCF calculator works well for predictable companies only, while Projected FCF works for a lot more companies.