DCF and owner's earnings help
My fellow monkeys,
I have recently submitted an article on Fabrinet (FN), for which I see near to mid term upside of between 37% and 67%, and a long term upside in excess of 100%. I've been doing a lot of reading on valuation, mainly through a Bear Stearn's PDF, along with Aswath Damodaron, McKinsey and Co, and my readings of Benjamin Graham, Seth Klarman, and Bruce Greenwald. I used the top-down approach for DCF : 1.EBIT 2.EBIT(1-TR) 3. add: D/A 4. less: capex 4. less: increases in non-cash working capital 5. FCFF. I chose to use FCFF because the firm is not highly levered. I used a discount rate of 15% to be conservative.
I am still not confident with cash flow modeling, and my understanding of using the change in non-cash working capital is still a little iffy. I will attach my models, and hopefully you all can improve my skills!
P.S. the DCF model is the one on the top, the owner's earnings model is on the bottom.
OKAY, nvm, WSO won't let me attach the document because I am a new user...If any of you want me to email the models, lemme know.
let me have a look Anthony fibo _ 85 at hotmail . com ta
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