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April 27, 2021
How to Apply Comparable Company Analysis Using Valuation Multiples

In this article, I will show you how to apply comparable company analysis using valuation multiples, and will use this valuation method to value a real company in the stock market. Comparable company analysis (aka relative valuation or valuation using multiples) is the most popular valuation practice, where you're comparing a company to its peers […]

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March 17, 2021
How to Calculate and Interpret the Weighted Average Cost of Capital (WACC)

In this article, I will explain how to calculate and interpret the weighted average cost of capital (WACC), and will walk through a step-by-step example for a real publicly-traded company in the U.S. stock market. The WACC is a calculation of a firm's "cost of capital," which in relation to investors and analysts is the […]

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March 15, 2021
How to Calculate the Intrinsic Value of a Company Like Warren Buffett

In this article, I will show you how to calculate the intrinsic value of a company like Warren Buffett, using his approach to discounted cash flow (DCF) valuation. This will be accomplished by looking into the Berkshire Hathaway shareholder letters, the Berkshire Hathaway website, and from reading the transcripts of any speeches and interviews Buffett […]

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March 2, 2021
How to Tell if the Stock Market is Overvalued

In this article, I will discuss how investors can use various ratios, yields, indicators, and an understanding of the current state of the market to recognize if the stock market is overvalued, fairly-valued, or undervalued. In short, this process involves looking at the S&P 500 P/E Ratio, the Shiller P/E Ratio, the Buffett Indicator, the […]

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January 6, 2021
Why the Weighted Average Cost of Capital (WACC) Is Flawed as the Discount Rate

In this article, I will discuss why the weighted average cost of capital (WACC) is flawed as the discount rate, and what individual investors can use instead to discount future cash flows in a present value calculation. The WACC is a calculation of a firm's "cost of capital," which is the weighted average of a […]

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January 3, 2021
How to Use Dividend Discount Models to Value Dividend Stocks

In this article, I will cover how to use dividend discount models to value dividend stocks in the stock market. Although the discounted cash flow valuation (DCF) model may provide a better means of determining a company's intrinsic value, dividend discount models remain a useful tool for estimating value, particularly with companies that regularly use […]

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November 8, 2020
How to Value a Company Using the Discounted Cash Flow Model

In this article, I will show you to how to value a company using the discounted cash flow model (DCF), and will guide you through a complete DCF valuation for a real company on the stock market. By doing so, we'll be able to estimate the company's intrinsic value, which will tell us whether the […]

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September 20, 2020
How to Accurately Estimate Terminal Value

In this article, I will cover how to accurately estimate terminal value, which is a figure you'll need to calculate when using the discounted cash flow model (DCF) to value businesses. I'm also going to discuss three ways of calculating the terminal value, in regards to companies on the stock market, and which method to […]

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September 7, 2020
How to Calculate and Analyze Return on Invested Capital

In this article, I will discuss the importance of return on invested capital, how you can calculate it, what company information the figure provides to investors, and how you can analyze this figure to make better investment decisions. I'll also provide several examples along the way to guide your understanding. The short answer on why […]

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