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ER is dead so I'll try this forum...need some guidance regarding splitting weight for DCF/Comps valuation
TL;DR - tried tweaking DCF to make it more optimistic but cannot honestly justify tweaks. Resorting to arriving at target share price with DCF /Comps weight - don't know how to justify/explain my decision for 60% DCF 40% Comps. Need some guidance. Disclaimer: I'm creating an equity research/stock...
Technology IB 2020 Grad recruiting timeline
I'm a junior at a semi-target (I think you could call it that). For sure top 15. We have a really solid network. There is a good presence in NY and San Francisco. For fresh out of school hires, energy IB takes the cake for sure. I study political science and I'm minoring in business so I have very...
Football field graph - how to reach min and max DCF values?
Hello everyone, I'm a junior monkey trying to learn how to properly compose a football field graph and I'm looking for insight into what makes a successful one. Which variables should I take into account and what ranges should I be looking at to get proper min and max values for the DCF method?
DCF Multiples method
I don't conceptually understand the multiple method. What does it mean to "assign a ratio such as EV / EBITDA from a comparable company to determine the terminal value". I think the wording is confusing me. Can someone give me an example? Lets say: A comparable company has a EV / EBITDA ration of 8X...
DCF test and examples
Hi All, I have a few questions on the DCF 1hr/2hr excel test that you may have to sit as part of the analyst recruitment process. I do appreciate that there is quite a bit of content about this topic on the forum, but I can’t seem to find any specific examples and would appreciate some...
DCF valuation results into post-money or pre-money valuation?
Business plan involves future revenues which are already based on investment from investors, so valuation based on DCF should be post-money valuation? I am confused because usually if you perform valuation before investment it is pre-money valuation and than plus investment results to post-money...
DCF/Comps Weights...how do justifiy subjective decison?
TL;DR - tried tweaking DCF to make it more optimistic but cannot honestly justify tweaks. Resorting to arriving at target share price with DCF /Comps weight - don't know how to justify/explain my decision for 60% DCF 40% Comps. Need some guidance. I've built a thorough DCF and comps model from...
DCF Practice
Hi All, I have some interviews coming up that involve DCF testing (I believe using unlevered FCF). I understand the basic principles behind it, but I can't seem to find any practice models online. The tests are mainly 1hr (some 2 hr) and i think will involve a template that needs to be filled in....
Energy Asset Valuations
Hello Everybody, I received a job offer from a firm in NYC that invests in energy assets. They work on all stages, developing, financing and trading and distributing from the asset. They primarily purchase gas power plants and oil fields. My primary responsibility would be to work on asset...
WACC vs. Cost of Equity in a DCF
Why would one use Cost of Equity over WACC as the discount rate in a DCF? And in general why is WACC used?
Is this a proper way to explain DCF?
First you build a 5yr forecast of a company's FCF based on assumptions for revenue growth using the financial statements. The formal for FCF = (EBIT)(1- Tax rate) + dip + amort - cap expenditures - changes in working capital. 2. Then you discount the FCF's using WACC in order to get the net present...
How to make an Excel DCF model dynamic based on the number of forecasted years?
I'm currently interning at a real estate private equity firm and I have to build a model to analyse the DCF value of potential investments. My model is good, but different types of real estate do have different life spans. For every real estate property with a different life span I have to build a...
Financial Modeling in Real Life M&A Banking
Hello WSO , I'm a new undergrad about to enter FT at a pure M&A boutique. Throughout my years of finance projects in undergrad, the process of modeling is still ambiguous to me, particularly the rigor that would be required in an actual FT role. For example, with projecting sales growth for models,...
What is the appropriate level of DCF knowledge for an IB summer internship?
Hi there, I'm a rising junior at a target school with a good GPA. I'll be applying to internships for the summer of 2019 this summer and although I have my heart set of asset management and investing, I'll be applying for IB spots if asset management isn't an option. I have a bunch of...
The most advanced financial modelling course
I'm looking for the most advanced financial modelling online course (M&A, DCF and LBO), and by that i mean: * it should be case based * go deep into certain topics not covered in usual modeling courses (taxes, NOLs , PP&E schedules, etc.), * deal structures (insight into the +/- of various deal...
Minority Interest in Capital Structure
Hello everyone, this may seem like a stupid question but when creating a basic DCF model, how should i factor Minority interest into WACC? Specifically in the case of a costco DCF I'm working on. I'll save all of the details but debt is 36.3%, equity is 62.1%, and MI is 1.6%. For all intents and...
DCF result - Equity value from EV
Hi all What is the correct way to arrive at equity value after the EV was calculated (via DCF )? Suppose we have to value equity of a PRIVATE company. We identified target cap. structure, performed DCF and got the EV . What to do next? 1. subtract debt which is taken from the BS (assumption that...
DCF cash flow
Hello, I have just a quick question on a valuation point of view that confuses me. I have been given the following formula: FCF = EBITDA - Capex - Cash Interest - Cash taxes - Change WC. Should be this cash flow discounted at the WACC or at the sole cost of equity (i.e. FCFF or FCFE). Thanks
Model in a wheelchair (attached)
I'm attempting to learn this on my own, so I put together an XOM valuation to help me speak intelligently in an interview this week. Some problems I know I have here: * Balance sheet not balancing - possibly a seriously bad cash flow statement issue * Debt schedule - I took maturities from the 10-K...
Question for smart people only: Will D/E change after privatizing a state-owned enterprise?
Hello smart friends, I am tasked with valuing a state-owned airport that's in consideration of privatization. The enterprise is 100% debt financed and is not for profit. I must use DCF . I projected the FCF with the assumption that after privatizing the airport will have to expand operations in...
Doing a DCF for a private design firm w/o all the relevant financials. Any suggestions?
Hey guys, So my VP is having me do a DCF for this design firm we're advising on a sell-side acquisition, but they provided us with limited financials and haven't gotten back to my requests for more info. I'm assuming I should just look at comparable companies within the space and take the mean of...
NAV Useful Valuation Method?
While studying for ib interviews, I have found guides always state the 3 common valuation methods as DCF , Comparable Companies, and precedent transactions; however, while reading an M&A book, the author states the NAV method as one of the most common. Since the book was published in 2001, is NAV an...
UBS IB - Analyst - Funds Advisory
Hi Guys, I have an interview with UBS coming up the position is: Analyst - Funds Advisory and Shareholder Services. I was wondering if you guys had any idea as to what I could expect? I feel like the job description was very broad. Any ideas on what quantitative questions might be asked? For context...
Moving From Equity Research to Investment Banking and vice versa
Hi Guys, So one thing I've been really trying to figure out is Equity Research or Investment Banking. I interned for 6 months in Equity Research and loved it and am studying for CFA . I loved the process, and consider myself not too quantitative and can give presentations/talk to people well. I...
DCF - Convertible Debt Treatment
There's two DCF scenarios where I'm not 100% sure how to approach the discount rate and what value I'm ultimately arriving at with the discounting (EV or equity value). Can anyone check my logic below? In both situations we assume the company is not planning on taking on any straight debt. 1. A...
Help with balance sheet on DCF assignment
Hey guys, I'm working on an assignment and I seem to be stuck trying to get the balance sheet to balance out. Hoping someone could take a look to see where I went wrong and point me in the right direction. Any help would be appreciated. Thanks
OpenSource Argus?
Hello all, Apologies if I missed this in a previous thread. Does anyone out there know whether a decent OpenSource (free) alternative to Argus DCF /Enterprise exists? I've seen some cheaper alternatives, but they look/feel so... cheap. They also don't seem to have the versatility of Argus. Any help...
unlever beta with preferred stock
Dear all, My query is the following (hope one of you could help): I'd like to take into account preferred stock when unlevering equity beta & then relevering the asset beta to a new equity beta, appropriate to the target cap. structure. If I pick Hamada hypothesis (existing tax shield & null debt...
FCF and Equity Value for a one year company?
I’ve been practicing DCFs quite a lot recently but a back to basics question has really stumped me. Imagine a company with: Revenue $150 Costs $60 Depreciation $20 CapEx $20 No discount rate It exists only for one year and will liquidate at the end of it, where it will be able to salvage its $10...
FCFE and terminal value?
Hi! I'm trying to value a holding company that owns 3 projects, one of which has amortizing debt (changing leverage) for acquisition purposes. I'm fine with valuing the firm as a whole using FCFF and assuming it will be refinanced to a target D/E, but my questions are as follows: 1.- If I were to...
DCF deferred taxes
In a DCF I'm confused what to do with deferred taxes if I should include it or not? For the working capital calculation in a DCF you excluded deferred taxes but when you add back non cash expenses in a DCF like D&A and Stock based comp do you add deferred taxes?
Lender/Debt Fund Modeling vs Broker Modeling
This is a bit early but still curious, I'm looking to make the transition out of brokerage roles to lender/fund side. What are the differences in modeling required? I am used to making a 10 year DCF with equity hurdles and JV splits npv, irr , COC, MOIC, analyst,how would a lender look at the debt...
DCF Question - Large Growth CapEx for One Year
I'm currently doing a DCF for an automotive parts supplier. Management has stated that they will be spending a few hundred million to build a new factory in 2018. However, when I incorporate this growth capex into my unlevered DCF , it causes the entire PV of UFCF to go negative. As a result, more...
Two Superdays Next Week--Advice On How To Answer Two Possible Questions
Hi guys, I have two superdays next week: one for a large Real Estate Private Equity Firm and another for a Large REIT . In my previous interviews I've been fairly confident in my answers to technical questions aside from two: 1. Walk me through a DCF valuation on an asset.....How do you find an...
How Tax Rate affects Enterprise Value (EV)
Hi all, I have some questions on an undying topic that's continuously discussed on the street: how tax rate affects EV valuation of companies. Some people argue it's positively correlated to EV while others argue it's the opposite. Based on my experience/observation, I think it's positively...
The $400 Million Mistake at Lazard: Solarcity "Undervalued" in Tesla Purchase
This was a juicy little story that came out today...apparently someone double-counted some projected indebtedness for SolarCity which dropped the projected valuation range by $400m. That comes out to right around 15% of the $2.6Bn deal...which made me pause for a minute and think... While Lazard is...
When does it not make sense to DCF?
Hi Monkeys, Out of curiosity, when does it not make sense to use a DCF ? I know when cash flows are negative it doesn't make sense, but are there any other reasons?
Can Someone Take a Look at My Model (Especially the Debt Model)
Hey guys, having some trouble with a model. This is just for practice; I'm modeling The Cooper Companies. In their 2015 10k , they mention they have "890.8 million available from Revolving Credit Agreement". Is this supposed to be their revolver? I'm not sure how to model this into my debt/revolver...
Terminal Value too High; What to do?
My terminal value / ev is 90%. What should I look at to find out what I did wrong?
DCF Myth 1: If you have a D(discount rate) and a CF (cash flow), you have a DCF!
Mod Note (Andy) - as the year comes to an end we're reposting the top discussions from 2015, this one ranks #35 and was originally posted 2/24/2015. Earlier this year, I started my series on discounted cash flow valuations ( DCF ) with a post that listed ten common myths in DCF and promised to do a...
DCF-Intercompany balances and cash
I am valuing an early stage company, which is part of a larger established group, using the FCFF method. I am trying to address the following peculiarities: 1. The Company has a large cash balance which earns minimal interest, sitting in a checking account. No other investments in marketable or...
DCF- Estimating Revenue(Sales)
Hi, I have a quick question regarding the DCF . I understand the process, the only problem I have is that there doesn't seem to be a sure consensus on how to estimate the revenue growth rate. Some use scenario analysis, linear regression, others use the 10-k report, sector forecast, historical rate,...
What are the fastest ways to learn how to do DCFs, Merger Models, and Transaction and Public Comps in Excel in 3 Days?
Hey fellow monkeys, For an IB internship application due in three days, I have been asked to create a DCF , merger model, and write a one-page report on a certain company using public comps and transaction comps . The problem is that I have very little experience with these topics in terms of...
Help with Netflix Inc. DCF
Hey WSO, I'm pitching Netflix Inc. long this upcoming tuesday at a stock pitch competition. Currently working on the intrinsic value and I'm having a hard time figuring out the change in networking capital yoy for the historical period. Link to 10k is here http://ir.netflix.com/sec.cfm If anyone...
DCF for Private company (WACC)
I have a question about valuation hoping anyone could help. I have a private high-tech company with positive income for 3 years. I would like to use industry average D/V, E/V ratio to calculate WACC and Beta for the cost of equity. However, this company has about 40% preferred stock. The WACC=...
Loughlin Management Partners + Co.
Hey guys, Been a while since I've posted anything on here. I was wondering if anyone had any info/insight on the restructuring firm Loughlin Management Partners + Co? It's a small restructuring firm in NYC with only about 30-35 people (most restructuring groups are lean to begin with anyways), but...
what-if valuation method: any of you assign probabilities?
normally I'd ask this in the investing/markets section but the question is mainly geared toward hedge fund professionals so please forgive the intrusion. when you perform scenario based analysis and you compute the classic risk-to-reward ratio (3-1: 3 upside vs 1 downside), do you generally assign...
Help on DCF - Can you discount cash flows directly from the CF Statement
I have built an integrated operating model and am coming across a problem. Can you discount Unlevered Free Cash Flow directly from the cash flow statement? When I calculate Unlevered Free Cash Flow from EBIT, I am getting a different result than what is on the Cash Flow Statement. Part of the reason...
Base/Upside/Worst Scenarios in DCF
Hello all, How do I decide on my assumptions in a DCF Model 's base, upside, and worst case scenarios? Would it make sense to use, for example, management's optimistic outlook for my upside, more conservative assumptions for my base...and what would be the best way to determine reasonable...
Cash Question on DCF
Hello: I had a quick question regarding cash and CCE for public companies. What sort of things fall under CCE? I've read a mixture of things, so is the consensus (Cash, Marketable securities, T-bills)? Also, on a DCF , is only cash used, or CCE? Thanks
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