How To Use This Calculator
This calculator estimates the intrinsic value of a stock (how much the underlying business and assets are worth).
Fill in the required fields and the calculator will run a discounted cash flow analysis to come up with a current value.
If you are unsure how to find the data required, each field is explained underneath.
INTRINSIC VALUE ESTIMATE
(See calculations below)
Intrinsic Value Calculation
How To Find Free Cash Flow
Free cash flow refers to the amount of excess cash a business generates.
Free cash flow is calculated as follows:
Operating Cashflow - Capital Expenditure
You can find both of these figures on a company's Cash Flow Statement.
A summarised Cash Flow Statement for listed companies can be easily accessed for free on Yahoo Finance.
As an example, here is the Cash Flow Statement for Briscoes showing a current free cash flow of $82.3 million:
How To Find A Company's Cash Balance
A company's cash balance refers to the free cash balance available in its bank accounts.
You can find this figure on the Statistics page on Yahoo! Finance.
As an example, here is the Statistics page for Briscoes, showing a cash balance at the mrq (most recent quarter) of $97.58 million.
How To Find A Company's Debt
A company's cash balance refers to the free cash balance available in its bank accounts.
You can find this figure on the Statistics page on Yahoo! Finance.
As an example, here is the Statistics page for Briscoes, showing a total debt balance at the mrq (most recent quarter) of $285.79 million.
How To Estimate A Company's Growth Rate
There is no single way to estimate a company's growth rate.
Here are some common ways:
- Look at the previous years and use its growth in the past to estimate its growth in the future.
- Use growth rates that analysts have predicted.
- Use an industry growth rate
- Assume the company will simply grow with inflation (best for mature companies)
Yahoo Finance will often summarise analyst growth rates for you. As an example, here is the Analysis page for Briscoes on Yahoo Finance, showing a forecasted growth rate for the next 5 years of 12%:
You could also look at the Cash Flow Statement and see how much they have grown in the last few years.
Here is a look at Briscoes Cash Flow Statement, where you can see they have grown in the last 3 years (between 10% to 30% per year).
How To Choose An Acceptable Return
This is completely up to you as an individual investor.
Ideally when it comes to stocks, you would the return to be higher than the interest rate you get from the bank, to compensate you for the additional risk that share investing entails.
Therefore (as an example) if the bank is currently offering savings rates of 4%, you might want to demand double that (8%) from the sharemarket.
Another useful data point is the NZX 50 has returned around 10% per year between January 2000 and January 2020. This could be considered a reasonable rate of return for a retail investor.