Avid followers of Warren Buffett (Trades, Portfolio) and know that to value a company you must estimate the present value of the future cash flow that the company will generate.
It sounds simple, but, of course, it isn't.
Estimating cash flow for the next year is tricky. Estimating cash flow for the next ten years exponentially so.
And what sort of discount rate do you apply to those cash flows? Will interest rates stay where they are for the next ten years or will they finally start to rise?
Professor Damodaran provides us with some valuation advice:
