Forget DCF Models: Use THIS Instead

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👨‍💼Brian Stoffel is a writer, investor, YouTuber, and financial educator. He's a teacher at heart. Brian has been investing for over a decade and has written over 4,000 articles for The Motley Fool. Brian worked as a middle school teacher in Washington, DC for over 5 years. He and his wife had a “mini-retirement” in Costa Rica and now spent a portion of their year there in a containership home. Brian plans his life and his investments around “antifragile” principles.

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[BrianFeroldiYT]

Hi everyone! The data for Google's stock was accurate when we filmed it, but it will obviously change over time. Here are the resources mentioned in the video:




Hope this video is helpful!

[Martinit]

Excellent. I modified my copy to add a Discount Rate calculation (based on Risk-free interest rate, equity premium, stock beta) and also added a second FCF model that allows me to model a decay of the growth rate (rather than assuming that after 10 years it abruptly slows to the Terminal Growth Rate).

[tomasmachado]

Brian, please be aware of a very important topic. When discounting back the Free Cash Flows to the Firm, this will give the estimated Entreprise Value of the company not its Market Value (Equity). After getting the Enterprise Value, if you have to deduct the Net Debt to get the Equity value and subsequenlty divide by the shares outstanding to get the implied share price today.

[JEDAM]

Hi Brian (and Brian), You guys were absolutely my favorite hosts on the Motley Fool and Industry Focus show (focus on tech) back then. You did a wonderful job and I was listening to your expertise every time I had the opportunity. Now that you have left the Motley Fool and now that The Motley Fool hardly ever speak about small and mid sized tech I never listen to them any longer. In my eyes they took a wrong decision to turn away from tech into a more conventional direction with solely focus on large tech companies and value/dividend stocks. I understand that 2022 was a very tough yeah for both myself and everybody else who were interested in the companies we like so much. But now that tech and small to mid cap tech is surging while e.g. health, banking and energy are sinking The Motley Fool still recommends those assets. What do I want to say about all this? I think I just want to say that I miss your shows and I want to express ny deepest gratitude for your work. Keep going on, please! What about making a fond that people can invest in? Best regards from Denmark!

[Brandizumi]

finally the audio is .. right. keep it up!

[RRon]

Wonderful, thanknyou for this amazing free tool, and simple explanation 🙏

[JD-imwu]

u guys have definitely evolved the valuation paradigm of the past

[rjw]

Learning a lot from you Thanks for the outstanding content!!! Thanks for the RDCF Calculator tool

[versusminus]

Thank you very much for this calculator. I have been using for the past three hours. I really needed this and adding this element of analysis makes my entire valuation process far more complete.
~
I plugged in some figures for a REIT I am interested in and the results were very strange. I am wondering if I need to use FFO, or AFFO, or some other metric in the FCF box. If you could please advise me that would be magnificent.

[albertinanangula]

Is there no formula instead
Like making g a subject of the formula

[MohanNandigam]

PLease do more earnings videos like Uipath, alteryx etc. I see that you guys reduced the frequency of videos.

[FinancialGrohth]

Would it not be simpler if the spreadsheet solved for the Year 1-10 Growth Rate as opposed to the user having to tinker with the growth rate until the Estimated Intrinsic Value is a close approximation to the Current Share Price?

[sashaherda]

Would you explain the assumed underlying connection between the expected stock growth and the FCF growth? Why is it assumed that the average cash flow growth rate would result in the inputed discount rate?

[JochemAdmiraal]

Hi Brian, thanks for your free Reverse DCF Calc. I only got one question about ''Enter the stock ticker'' it don't work in the sheet. I try to place a stock ticker in the sheet but nothing happens.

[nirajpavagadhi]

I tried but I didn’t receive a link to my email! Is there anyway can you send me link? Thank you

[martinandersennrgaard]

Does the reverse DCF assume a terminal P/FCF multiple to arrive at the intrinsic value? If yes, why is it hidden? And what is it defined as in the example?
Thx for great content!

[rohitlakhani]

Hello, Brian. I twice tried to download the rdcf, but it did not come to my email. Kindly assist. Thanks, Rohit

[LuisellaLorenzo]

I have lost a lot trying to invest on my own, I keep making loses. Can anyone help me out or at least tell me what I'm doing wrong?

[AC-getr]

You guys still active? Miss your great channel

[AustinMcClellan]

Not only is it comical that you're "modeling" using google sheets instead of excel where a simple goal seek function would save you brain cells, but you're not even using the right free cash flow figure. FCF is calculated as after tax operating profit + D&A - CapEx - investment in NWC. Also, I'm just going to take a wild guess and assume you're using basic shares outstanding, or just whatever you got from yahoo finance. Accurately calculating diluted shares outstanding, which is what you actually need, would involve looking at current exercisable stock options on a 10-K and using the treasury stock method. These are only a few things wrong with the nonsense you're spewing, I don't have it in me to watch the whole video. The fact that I took the time to comment this much is almost as ridiculous as you two trying to explain how to model a reverse DCF properly.