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
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%.
For the terminal values, we use 4% growth rate.
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
GuruFocus Affiliate Program: Earn up to $400 per referral.
GuruFocus.com is not operated by a broker or a dealer. It has an affiliated registered investment adviser, which serves as the subadviser to an exchange traded fund. This investment adviser does not provide advice to individual investors. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute investment advice or recommendations. The individuals or entities selected as "gurus" may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. Gurus may be added or dropped from the GuruFocus site at any time. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.