Undervalued Predictable Companies - Discounted Free Cash Flow and Discounted Earnings

GuruFocus uses two methods – the Discounted Cash Flow method and Discounted Earnings method – to determine if a company is undervalued or overvalued.

The companies with a “Discounted Cash Flow Discount (%)” higher than 0 are considered undervalued companies based on the Discounted Cash Flow method. If the Discount (%) is lower than 0, then the companies are considered overvalued based on the Discounted Cash Flow method. Please click to see how GuruFocus calculates Intrinsic Value: DCF (FCF-based).

The companies with a “Discounted Earnings Discount (%)” higher than 0 are considered undervalued companies based on the Discounted Earnings method. If the Discount (%) is lower than 0, then the companies are considered overvalued based on the Discounted Earnings method. Please click to see how GuruFocus calculates Intrinsic Value: DCF (Earnings-based).

What are Undervalued-Predictable Companies & List of Undervalued-Predictable Stocks

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We applied the discounted cash flow and discounted earnings to the high Predictability Rank, and calculated the intrinsic values of the these companies. These are the companies that appeared to be undervalued as measured by discounted free cash flow model or discounted earnings model. The formula and methodology are described in What worked in the market from 1998-2008? Intrinsic Value, Discounted Cash Flow and Margin of Safety. The assumptions for the calculations are:

  1. We assumed a discount rate of 12%.
  2. The growth rate for the next 10 years are assumed to be the same as the average growth rate of the past 10 years. If the growth rate is higher than 20%, we will use 20%. If the growth rate is lower than 5%, we will use 5%.
  3. For the terminal values, we use 4% growth rate.
  4. In this page, we use TTM eps without NRI / free cash flow and 10-year compound earnings / free cash flow growth rate as default.

The intrinsic value of the companies are calculated with:

Intrinsic Value = Future Earnings at Growth Stage + Terminal Value

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Ticker Company Predictability Rank Current Price Discounted Free Cash Flow Discounted Earnings PE Ratio Dividend Yield %
Valuation Discount(%) Valuation Discount(%)
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$47.36
$568
92%
$173
73%
5.45
2.32
$9.38
$119
92%
$29
68%
9.59
0.69
$18.97
$210
91%
$29
35%
9.01
2.64
$51.16
$580
91%
$105
51%
6.72
3.13
$3.14
$32
90%
$16
80%
5.65
0
$30.36
$300
90%
$143
79%
8.07
2.27
$19.80
$163
88%
$56
65%
9.04
1.52
$122.13
$835
85%
$581
79%
5.66
0
$4.66
$30
84%
$15
69%
7.94
0
$20.45
$126
84%
$39
48%
7.23
6.69
$7.55
$42
82%
$29
74%
13.56
6.53
$182.81
$855
79%
$1,540
88%
5.02
0.75
$60.64
$294
79%
$377
84%
6.11
3.28
$112.20
$545
79%
$300
63%
6.62
1.87
$19
$89
79%
$34
44%
13.01
2.11
$132
$605
78%
$372
65%
6.76
0.90
$58.94
$263
78%
$92
36%
23.59
1.03
$54.43
$242
78%
$79
31%
9.82
4.46
$185
$833
78%
$1,222
85%
5.75
0
$29.25
$136
78%
$46
36%
10.30
4.65
$41.82
$186
78%
$107
61%
7.95
3.68
$590
$2,739
78%
$2,376
75%
9.44
0
$46.04
$198
77%
$94
51%
8.62
1.74
$4.23
$17
75%
$12
65%
4.16
40.74
$278.49
$1,111
75%
$691
60%
10.69
1.67
$30.66
$124
75%
$70
56%
16.57
0
$32.78
$132
75%
$68
52%
9.23
4.03
$99.86
$383
74%
$323
69%
8.99
3.60
$103.75
$398
74%
$323
68%
8.99
3.46
$27.29
$96
72%
$68
60%
8.66
1.92
$95.63
$328
71%
$321
70%
11.33
0
$68.69
$238
71%
$247
72%
10.19
2.36
$46.06
$159
71%
$182
75%
9.62
1.30
$30.52
$103
70%
$53
42%
7.83
2.99
$14.54
$49
70%
$26
44%
8.03
3.85
$103.04
$326
68%
$151
32%
11.45
3.48
$97.78
$304
68%
$181
46%
11.64
0
$126.46
$400
68%
$392
68%
4.97
1.90
$58.88
$183
68%
$461
87%
4.85
2.16
$34.88
$109
68%
$170
79%
7.13
2.64
Total 199
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