Brian DeChesare
MAY 3, 2023
The DDM is more grounded because it’s based on the company’s actual distributions and potential future value. And it values the company today based on the present value of its dividends and that potential future value (either the stock price or the Equity Value via the Terminal Value calculation).
Valutico
OCTOBER 20, 2022
Well, the short answer is after that forecast period where we estimate each year’s cash flows then discount them, we add a single number at the end to account for all the theoretical years in the future, called the Terminal Value (TV). Explaining The Terminal Value. How do I calculate the Terminal Value?”
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Valutico
SEPTEMBER 13, 2023
SMEs can present challenges with DCF due to limited historical financial data, unreliable information, inadequate financial forecasts, and difficulty in determining terminal value. However, market information required for CAPM, such as beta coefficients and risk premiums, may not be available for SMEs.
Valutico
AUGUST 10, 2023
However, market information required for CAPM, such as beta coefficients and risk premiums, may not be available for SMEs. Lastly, determining the continuity value (or terminal value) is a subjective process that often leads to disagreements.
Brian DeChesare
AUGUST 10, 2022
The entire Energy Services vertical is like a “high Beta” play on oil and gas prices. Essentially, the NAV Model is a super-long-term DCF without a Terminal Value. The Terminal Value doesn’t make sense in this vertical because oil and gas resources are finite; you can’t assume that a company will keep producing “forever.”.
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