Undervalued Predictable Companies - Discount Cash Flow and Discount Earnings

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What are Undervalued Predictable Companies?


We applied the discounted cash flow and discounted earnings to the top ranked predictable companies, and calculated the intrinsic values of the these companies. These are the companies that appeared to be undervalued as measured by discounted cash flow model or discounted earning model. The formula and methodology are described in What worked in the market from 1998-2008? Intrinsic Value, Discounted Cash Flow and Margin of Safety. The assumptions for the calculations are:

  1. We assumed a discount rate of 12%.
  2. The tangible book values of the business is used as the current book value.
  3. The growth rate for the next 10 years are assumed to be the same as the average growth rate of the past 10 years. If the growth rate is higher than 15%, we will use 15%.
  4. and for the terminal values, we use 4% growth rate.
  5. Compared with the DCF Calculator, in this page we use the EPS of the last fiscal year as default earnings, and the average of the first 5-year period and the second 5-year period as the default growth. While in the DCF calculator we use TTM EPS and 10-year compound growth rate as default.

The intrinsic value of the companies are calculated with:

Intrinsic Value = Book Value + Future Earnings at Growth Stage + Terminal Value



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Discount Cash Flow Discount Earning Ratio
Symbol Company Predictability Price Valuation Discount (%) Valuation Discount (%) P/E Ratio Yield (%)
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$1109.45$139420$12611225.000.00
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$618.60$76219$9203318.900.00
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$396.79$111-257$5212421.701.18
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$158.51$18916$3325213.002.68
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$137.50$45870$3225712.100.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$77.59$64788$285737.800.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$289.50$45837$251-1532.900.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$257.81$164-57$238-822.301.62
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$143.06$132-8$2153316.101.96
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$133.21$16218$2063518.500.00
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$193.14$55-251$199327.700.00
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$107.13$45-138$1954515.700.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$165.60$31-434$1931424.400.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$178.82$106-69$190621.601.01
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$106.82$67-59$1743915.302.21
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$113.88$27258$1733417.801.23
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$169.50$40959$165-316.300.51
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$139.72$15-831$1561025.700.00
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$118.47$28-323$1542321.801.61
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$79.45$43-85$1424415.102.01
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$84.29$45-87$1283416.001.99
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$159.85$18514$127-2625.600.15
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$91.02$86-6$1212521.500.88
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$90.51$87-4$1192419.702.15
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$132.75$19733$116-1432.500.00
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$93.31$27-246$1151923.000.00
Premium Member OnlyPremium Member Only
  • Currently 4.5/5
Business Predictability Rank: 4.5-Star (On Watch)
Back Testing Results:
Average gain of all 4.5-Star stocks: 10.6% per year.
% of Stocks that are in still loss if held for 10yrs: 10%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$93.22$66-41$1091418.303.52
Premium Member OnlyPremium Member Only
  • Currently 5/5
Business Predictability Rank: 5-Star
Back Testing Results:
Average gain of all 5-Star stocks: 12.1% per year.
% of Stocks that are in still loss if held for 10yrs: 3%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$137.17$20-586$107-2836.700.73
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$100.14$11412$98-229.101.13
Premium Member OnlyPremium Member Only
  • Currently 4/5
Business Predictability Rank: 4-Star
Back Testing Results:
Average gain of all 4-Star stocks: 9.8% per year.
% of Stocks that are in still loss if held for 10yrs: 8%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
$115.09$75-53$98-1723.300.00

Add Notes, Comments

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User Comments

Jang80
ReplyJang80 - 1 month ago
Does Gurufocus send a notice when a company is removed from the Undervalued List? I purchased shares of a company that was on the list but then noticed later that it was no longer on the list. I have no idea when it was taken off the list and why.
Gurufocus
ReplyGurufocus - 1 month ago
Red box means that the recent trend is deviating from historical trend. It was explained in Tutorials: http://www.gurufocus.com/tutorials.php#&id=36158
Soodsaman
ReplySoodsaman - 1 month ago
Gurufocus,
can you please elaborate?
Gurufocus
ReplyGurufocus - 1 month ago
Red box means the the Predictability is on watch.
Soodsaman
ReplySoodsaman - 1 month ago
What do the red boxes around the predict rank
Sonny anand
ReplySonny anand - 1 year ago
Undervalued Predictable
Srini_saravanan@live
ReplySrini_saravanan@live - 1 year ago
Undervalues - let us see progress
Gurufocus
ReplyGurufocus - 1 year ago
"Now I see where the second valuation column comes from, but the first?"

The first just replace earnings per share with Free cash flow per share, the same method of calculation.
Cook19709
ReplyCook19709 - 1 year ago
Gurufocus,
Thanx,
Now I see where the second valuation column comes from, but the first? Sorry to be so stupid.
Gurufocus
ReplyGurufocus - 1 year ago
"I want to know where the valuation numbers in the columns come from."

They are calculated with the same way as our DCF calculator, using default parameters: http://www.gurufocus.com/fair_value_dcf.php
Cook19709
ReplyCook19709 - 1 year ago
I want to know where the valuation numbers in the columns come from.
Cook19709
ReplyCook19709 - 1 year ago
Kosanya,
From clicking the popup on the red box:

All businesses have challenges. Competitions, economic cycles and business execution may make businesses deviate from its previous tracks, and business predictability may change. In order to highlight this, we create a feature called Predictability Watch, which means that a predictable business shows sign of deviating from previous predictability. This deviation can be temporary; it can also be permanent.

The star-rating with a red frame shows that the company is on Predictability Watch.
Ramzi.mrad@google
ReplyRamzi.mrad@google - 1 year ago
is it really possible that there is not a single undervalued (neither on DCF nor on earnings) predictable company in Europe? seems that LVMH is the "Least undervalued" with +74% overvaluation based on DCF and -20% undervaluation based on earnings...
Are European companies that overvalued??
Kosanya
ReplyKosanya - 1 year ago
what does it mean when a stock is highlighted in red?
Gurufocus
ReplyGurufocus - 1 year ago
Thanks!

The error has been fixed.
Mkyashif
ReplyMkyashif - 1 year ago
Below mentioned happens for Utilities sector. I guess there aren't any stocks under Underdervalued Predictable, but it can be checked if there is a programming error.
Mkyashif
ReplyMkyashif - 1 year ago
I get 0 records.
Error: Warning: Invalid argument supplied for foreach() in /home/gurufocu/public_html/valuedcf.php on line 272
Gurufocus
ReplyGurufocus - 1 year ago
"Why so much difference in valuation based on DCF and Discount Earning? How do I decide which one is more likely to be closer to real valuation?"

Because a company's earnings can be very different from its cash flows. This is the case even for companies with very predictable earnings, such as Wal-Mart.
AshishGupta
ReplyAshishGupta - 1 year ago
Why so much difference in valuation based on DCF and Discount Earning? How do I decide which one is more likely to be closer to real valuation?
Mark Mahaffey
ReplyMark Mahaffey - 1 year ago
why can't you remove these comments from 2 years ago?
Babajoy3
ReplyBabajoy3 - 3 years ago
how can i buy predictable undervalued stocks bellow one dollar and one cent. sector energy and finance.on a short term.
Babajoy3
ReplyBabajoy3 - 3 years ago
how can buy stocks trading bellow one dollar and one cent bought by guru members.



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