DCF please help! beginner
Hey everyone,
I have been trying to get into the whole valuation of stocks and what better way than to start with the DCF model. I am new to all of this and am looking for some guidance. I think I have the basic idea down but feel like I am missing something.
I am trying to value Under Armour (UA). They are still pretty new and I am finding it hard to value. I think my calculation of WACC is pretty spot on and my growth rate seems reasonable but my intrinsic value is coming out way lower than the actual stock price. I attached my spread sheet with my DCF model which is pretty rough to say the least. Any advice would be appreciated and I am just trying to learn.
Thanks!
| Attachment | Size |
|---|---|
| Possible DCF (UA).xls 64 KB | 64 KB |
that spreadsheet is a mess...if you want someone to actually read through it to help find errors, I would at least make the effort to neaten it up and make it easy to find the information
I also need a very simple guide to complete a spreadsheet like this that is attached...because I think that we have to learn from simple things, there is a video on you tube very simple but practical to solve a dcf like this
your terminal value should discount back to current time from 5 years, not 6 it is already discounting back to 5 from 6 when you are using the gordon growth model also make separate schedules for capex and and every component of CFOs assuming a standard growth rate for the entire component will not give a value in align with the company standard cashflows. also taking the revenue growth rate and factoring that to forecast the fcff is not a good idea u need to forecast each and every intermediary component, (depreciation, amortization, Working capitals, capex (check management guidance) etc. Hope that helps
Your numbers for the early growth rates are low. Yahoo has this company growing at 33%/yr for the next five years. So i'd consider starting with year 1 growth of 50% and working down to maybe 20% year 5, and consider 5-6 perp. growth, and I would probably use a higher discount rate than 8% for a stock like this one. Even with this, your numbers are never going to match the stock price because there's too many variables, too much money in the third stage that we know the least about, and a result investors don't base their decisions entirely on a dcf.
If you are going to upload a spreadsheet here and you want to remain anonymous YOU NEED TO DELETE THE PROPERTIES. I've seen this on several occasions already where the workbook uploaded has the user's first and last name.
Woops after the first comment i went to clean it up a bit and havent checked back hahaha. Thank you for the comments I'm going to look into them and also read up more on DCF. Also thank you for letting me know about deleting properties. I guess you know who I am now.. Thank again.
Try to create assumptions and project every number with the assumptions
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