Warren Buffett Brilliantly Explains Discounted Cash Flow Analysis + Example! (How to Value a Stock!)

In this video, Warren Buffett gives a phenomenal explanation on how to use a discounted cash flow analysis to value a stock. We then go over a step by step example on how to perform a discounted cash flow analysis.

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Let me know if you have any questions in the comments below! Thanks for watching and please don't forget to like and subscribe to the channel!

[TransientNeurotic]

When Warren said “I look at the business and say what..”
That was very relatable

[stevendoiron]

Thanks for this sheet. I did have a quick question concerning the "Average Growth Rate". The value for the average presented is the sum of the four growth rates calculated between the five years divided by five. As there are only four growth values, should the sum not be divided by four to find the average growth rate? Would appreciate if you could clarify. Thanks

[zepedromiranda]

Congratulations on the great content. Would you consider Short term invesments along Cash and Cash equivalents since they are easily converted into cash? I have seen this theory in some Discounted CF Models.

Thank you once again

[jamesdoherty]

2022 Future Free Cash flow. You said, " using our growth rate of 9%". 27455.00 x 9% = 2470.95. Yet you entered 20, 000.00? Why?

[vishalb]

Your calculation doesn't make sense to me, why is your Y1 projection for FCF starting at $20, 000, instead of $27, 455? Please care to explain!

[Simo-homl]

I may be very stupid but I don't understand why a business value is the sum of cash that deliver to you. What is the plan then, buy it and then wait 10 years to have the money back? This does not have a lot of sense. Or is the discount rate basically your return that is included in the calculation of the cashflow?

[UnforgivingD]

I am attempting the value a business I am looking out. However the free cash flow is negative some years. when I put for Example $1, 180 but the year after lets say -$600 my google sheets gives me a growth of 296.67%. How can I show it to have a negative average for those two years?

[tonykollar]

How can you project average future growth rate using past performance growth rate? Future is open nobody knows ...I dont understand this logic

[mugi]

discounted cash flow is a philosophy. it's kinda pointless when you thrown in into some model and variable

[ivanbosnjak]

terrible, you did not explain anything