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How to Use Stock Intrinsic Value Calculator

Guide on "How to calculate Stock Intrinsic Value"
[Download the Stock Intrinsic Value Calculator]

Below is how it looks like:


We will be teaching you how to utilize this Free Calculator to grab Undervalued Stocks!
(Discounted Cash Flow Method)

1. Key in Stock name & symbol
2. Enter the Operating Cash Flow [This figure signifies the Free Cash Flow (FCF) for the company. You can obtain this figure from the Annual Report: Take the "Operating Cash Flow" minus "Capital Expenditure (usually used to purchase fixed assets)]

You can see below pictures for example...




3. Cash flow growth rate is a bit troublesome... You need to obtain the FCF for every last 5 years and determine the average growth rate.


4. Shares outstanding - Many people do not know how to go get this number. Above is one picture on how to easily retrieve it.. Just Ctrl + F and search for shares outstanding in the Annual Report.. and there it is!

5. Last but not least, the discount rate is usually set at the 3 months US Treasury rate in the past. However, It can be adjusted to how much return do you wish to obtain from this investment. E.g. If you wish to get 10% return annually from the stock, just enter "10" inside the box! Simple as that!

Things to Note:

If you are looking to purchase an undervalued stock, learn from warren buffett. Pick a company with Strong Fundamentals and purchase it at a margin of safety of 50% below the Intrinsic Value you just calculated! Profits behold!

Hope you like this guide on "How to Use Stock Intrinsic Value Calculator" & May you make lots lots $$$! Kindly Like my page at http://www.facebook.com/pages/KissInvesting.. Thanks!
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28 comments:

  1. James LimMay 2, 2012 at 4:23 PM

    Hi, thanks for your post. I can't get the figure, how you do the calculation for the "Cash Flow Growth Rate?

    ReplyDelete
  2. fqfeqMay 5, 2012 at 4:38 PM

    Oh.. For that its a bit tedious.

    You have to calculate the Free Cash Flow of the company for the past 5 years.

    Measure the geometric growth rate of the figures and you will get the growth rate.

    To be honest.. You can just take prev year and this year figures to compare and see its growth. Predict how the company will fare and estimate a growth rate depending on its prospects for the future.

    Hope it helps..

    ReplyDelete
  3. AnonymousOctober 5, 2012 at 2:11 PM

    hi, i downloaded your intrinsic value calculator. trying to key in the data for stock: hartalega(HART) - the annual report is here http://hartalega.listedcompany.com/misc/ar2012.pdf, i just would like to make sure on the operating cash flow (page 63) ...

    is it 291,708,771 minus 35,444,185 ?

    i see your example on the blog. but this company cash flow statement having more itemize.. not sure if my understanding is correct?

    ReplyDelete
    Replies
    1. fqfeqOctober 6, 2012 at 4:52 PM

      Hi Kate, yes you are right... minus the (35,444,185) from the "Purchase of property, plant and equipment".. :)

      Delete
  4. LinzOctober 7, 2012 at 8:19 PM

    Hi James,
    Thank you for sharing about how to calculate the intrinisic value of stock.
    I was referring to your CapMalls example.
    With regards to the Operating Cash Flow of $63 million. I could not get this figure after looking at the 2009 financial reports. Pls see page 8 of the financial statements http://capitamallsasia.listedcompany.com/newsroom/20100203_074208_JS8_6EA5BAACFAD354DD482576BE002BA151.1.pdf .

    I could only find out that the Operating profit before working capital changes is $60,130,000. But I still do not know how you calculate it to $63mil for the Operating Cash Flow.
    Pls advise the variables that you obtained from the financial report from the link above. Thank you.

    ReplyDelete
    Replies
    1. fqfeqOctober 8, 2012 at 1:39 AM

      Hi Linz,

      I was using the OSIM as an example..

      Can you enlighten me if you seen another example from other posts?

      Regards,
      James

      Delete
  5. LinzOctober 8, 2012 at 11:39 AM

    Hi James,
    I was referring to your Excel sheet example, where it stated about the CapMalls Operating Cash Flow in 2009.

    I could only find out that the Operating profit before working capital changes is $60,130,000. Purchase of property, plant and equipment (5,083). Therefore the Operating Cash Flow should be $55 mil instead of $63 mil, which was stated in your Excel sheet which I downloaded off your website.
    Pls advise on how you got $63mil and not $55mil.
    Thank you.

    ReplyDelete
    Replies
    1. fqfeqOctober 8, 2012 at 10:18 PM

      Hi Linz,

      Omg.. i am so sorry.. it is not updated. As in the figures are not correctly placed. The file has been quite some time ago before i uploaded it.

      So sorry for the inconvenience caused.

      Regards,
      James

      Delete
    2. LinzOctober 9, 2012 at 12:12 PM

      ok noted. thanks.

      Delete
  6. AnonymousOctober 18, 2012 at 12:12 PM

    James, kate again,

    the calculator i downloaded.
    just wanna make sure on "current EPS" at first sheet.

    for company Zhulian http://www.bloomberg.com/quote/ZHCB:MK

    inst correct to use: 0.2406?

    Earnings Per Share (MYR) (ttm) 0.2406

    ReplyDelete
    Replies
    1. fqfeqOctober 22, 2012 at 11:06 PM

      Hi Kate,

      You can use that. Because ttm stands for trailing twelve months so it's more accurate.

      But for me i will just use the EPS from Annual Report :)

      Doesn't make a lot of difference i think..

      The intrinsic value is just an estimate.. more important to look at fundamentals.

      Cheers,
      James

      Delete
  7. AnonymousNovember 8, 2012 at 9:48 PM

    Hi James,

    Is Cash flow growth rate = Operating Income Growth Rate?

    And for example, using Golden Agri-Resources Ltd.(E5H), the Cash Flow growth rate is 16.94% for average 5 years. Can you help to confirm? Thanks

    Regards
    Roy

    ReplyDelete
    Replies
    1. fqfeqNovember 14, 2012 at 11:02 PM

      Hi Roy,

      Sorry for the delay in reply. Been busy with work.

      Can you provide me the link as to the information on how you obtained it first?

      Regards,
      James

      Delete
    2. AnonymousDecember 6, 2012 at 9:59 PM

      Hi James

      Thanks for your reply..

      I am trying to calculate the IV of Golden Agri-Resources Ltd (E5H) using Discounted Cash Flows method. However, I am not sure if my calculation is correct. Could you please advice if my IV is correct.

      Discounted Cash Flows:
      Operating Cash Flow (current) - $0.88 millions
      Cash flow growth rate - 10.99%
      No. of Shares Outstanding - 12.3 millions
      Discount Rate - 10%
      Final IV --- $0.75

      Regards
      Roy

      Delete
    3. AnonymousJanuary 20, 2013 at 11:29 PM

      Hi Roy, how did you get "Operating Cash Flow (current) - $0.88 millions"?

      Delete
  8. barney oNovember 16, 2012 at 2:41 AM

    Good day James,

    I tried using your Calculator to calculate the IV of Singtel,

    could i just confirm whether the values I filled in are correct?
    Operating cash flow current : $3462 million
    cash flow growth rate: 0.0255%
    no of shares outstanding: 15,971.9 millions
    dis rate: 0.1%

    & the result i got for intrinsic value of Singtel shares was $2.16.

    look forward to your reply,
    regards,
    Barney

    ReplyDelete
    Replies
    1. fqfeqNovember 17, 2012 at 5:38 PM

      Good day barney,

      Yeah you are right.

      You can check out Singtel Financial Summary here as well http://info.singtel.com/node/2970.

      Singtel has pretty much stayed stagnant. All i can think of it is a Cash Cow.. giving out stable yield. Unless there is some growth prospects it is targeting..

      Happy Investing!
      James

      Delete
    2. BarneyNovember 18, 2012 at 2:33 AM

      Thanks James,

      This would mean that Singtel is "severely overvalued" ? Also, could i ask why are discount rates based on US t-bills and not sg t bills?

      Delete
    3. fqfeqNovember 21, 2012 at 11:56 PM

      Hi Barney,

      It is just a common practice because US is the BIG BOSS... haha.. Like why valuation has to be done this way for example.

      Cheers,
      James

      Delete
  9. AnonymousNovember 17, 2012 at 1:13 PM

    There are so many assumptions that the model makes especially on the discount rate.

    Discount rate can't be the US treasury rate (4% in the screenshot) as it does not incorporate the riskiness of the stock. (Using 4% will give an overvalued price)

    To be accurate, either the cost of equity or WACC should be used depending on the model being used.

    ReplyDelete
    Replies
    1. fqfeqNovember 17, 2012 at 5:31 PM

      Hi,

      Thanks for your input. But discount rate is usually based on "r" which is required rate of return. And i have mentioned in my post the following:

      "Last but not least, the discount rate is usually set at the 3 months US Treasury rate in the past. However, It can be adjusted to how much return do you wish to obtain from this investment. E.g. If you wish to get 10% return annually from the stock, just enter "10" inside the box! Simple as that!"

      Thanks,
      James

      Delete
  10. AnonymousJanuary 17, 2013 at 8:33 PM

    Hi James,

    How do we calculate Intrinsic Value if the Operating Cash Flow is negative?

    Regards
    Roy

    ReplyDelete
  11. AnonymousMay 18, 2013 at 6:48 PM

    Good day Sir.

    Quick question. Since the calculator produces a computation using the EPS and another using the EPS, and more often than not, even if you put in the accurate figures, the result of the two would be different. My question now, is which do I follow? Do I follow the price result which is the smallest and then determine is 50% discount and that would be my buy price? Thank you so much for your prompt reply.

    ReplyDelete
    Replies
    1. fqfeqMay 21, 2013 at 3:03 AM

      Hi,

      I suggest you can take the smaller EPS to be on the safe side :)

      Cheers,
      James

      Delete
  12. AnonymousJune 14, 2013 at 4:52 PM

    Hi James,

    Good Day to you!

    If latest annual report is 2011, do I take quarterly unaudited report for calculation? Example, Tambun http://tambunindah.investor.net.my/annual-reports. Also, how to determine Cash Flow Growth Rate & Discount Rate?

    Regards

    ReplyDelete
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    ReplyDelete
  14. AnonymousNovember 15, 2013 at 10:34 PM

    Hello there , i m trying to learn how to use your intrinsic value calculator on this your post. On This download link http://kissinvesting.blogspot.com/p/free-investor-tools.html
    it uses for calculating EPS .I find intrinsic value calculator with Operating cash flow on this your post so that i can have a linkline for download ? really appreciate i f you can help thanks you

    ReplyDelete
  15. Epic ResearchAugust 29, 2014 at 6:56 PM

    I appreciate your way of explaining the method to calculate stock intrinsic value, but i couldn't understand the use of it.

    ReplyDelete

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