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August 03, 2021

Everything Is a DCF Model

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August 03, 2021

Everything Is a DCF Model


Consilient Observer

Everything Is a DCF Model

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August 03, 2021

 
 

A Mantra for Valuing Cash-Generating Assets

  • We suggest the mantra “everything is a DCF model.” Whenever investors value a stake in a cash-generating asset, they should recognize they are using a discounted cash flow (DCF) model.
  • This suggests a mindset that is very different from that of a speculator, who buys a stock in anticipation that it will go up without reference to its value.
  • The topic deserves attention because many market participants don’t think DCF models are relevant, and many use heuristics for value without recognizing the purpose and limitations of the shorthands.
  • The intrinsic value, determined by the present value of future cash flows, attracts the price like a magnetic force. This means it is useful for investors to keep in mind the value drivers of a discounted cash flow model.
 
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Counterpoint Global consists of 54 people, including 30 investors, four disruptive change researchers, two consilient researchers and two sustainability researchers. Counterpoint Global’s culture fosters collaboration, creativity, continued development, and differentiated thinking.
 
 

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