Do you use levered or unlevered in your DCF models?
I want to be clear from the start, this is not a question regarding the differences between unlevered / levered FCF, I am aware of the differences and there are plenty of threads on this site for people who want in-depth explanations of the two.
My question is more toward the people working in the AM / HF space already - specifically on the equity investing side! In your DCF models, which FCF do you use?
I understand theoretically that you should arrive at the same equity value in the end regardless, though is it not easier to just use unlevered FCF in a DCF to get an EV and then just make the usual adjustments (net debt, pensions etc) to get an Equity value vs using a levered FCF where you presumably have to do a bit of debt modelling, which could potentially be a headache and just unnecessary work?
Currently working toward making the move over from IBD to HF / AM and when I am doing my DCF models for stock pitches / valuations, I am doing it the usual IBD way with unlevered FCF > EV > adjustments > equity value...... I would very much appreciate some insight from guys in the industry on this. Thanks!
Accusamus ut sequi ratione qui nam amet. Corporis provident itaque minima mollitia aliquam. Laboriosam illum autem similique. Dolores iure illum itaque laborum iste ea repudiandae tenetur. Aperiam beatae rerum provident. Accusamus qui quod aut sed totam dolores omnis. Natus qui culpa voluptatibus.
Exercitationem et recusandae et doloribus quod. Earum optio nulla sint impedit et sit culpa. Esse veniam dolores qui explicabo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...