Principle Intrinsic Value Formula, Principle Discounted Earning Flow Formula, Perpetual Discounted Earning Flow Formula and Bargains
Presented here some simple & handy principles of valuation.
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Definition 1 :
Compound Factor
= ROIC, √( ROIC×ROA ) & √( ROIC×ROA×[1+Gratio]² )
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Definition 2 :
Compound Economic Spread
= Compound Factor - Clean Discount Rate
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(A)
Principle Intrinsic Value Formula
= EPS × Compound Factor
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(B)
Principle Discounted Earning Flow Formula (Runway=Compound Factor)
= EPS ÷ Clean Discount Factor × [ 1 - (1 ÷ Clean Discount Factor)^compound_factor ] ÷ [ 1 - (1 ÷ Clean Discount Factor) ]
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(C)
Perpetual Discounted Earning Flow Formula (Runway=infinity=calculator entry 99999 years)
= EPS ÷ Clean Discount Factor × [ 1 - (1 ÷ Clean Discount Factor)^99999 ] ÷ [ 1 - (1 ÷ Clean Discount Factor) ]
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(D)
Key Bargains
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(D1)
Bargain 1
= Principle Intrinsic Value ÷ Clean Discount Factor
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(D2)
Bargain 2
Principle Discounted Earning Flow ÷ Clean Discount Factor
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(D3)
Bargain 3
Perpetual Discounted Earning Flow ÷ Clean Discount Factor
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(D4)
Bargain 4
= EPS × Compound Economic Spread
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(D5)
Bargain 5
= EPS × ROA
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(D6)
Bargain 6
Discounted Earning Flow (Runway=Compound Economic Spread)
= EPS ÷ Clean Discount Factor × [ 1 - (1 ÷ Clean Discount Factor)^Compound Economic Spread ] ÷ [ 1 - (1 ÷ Clean Discount Factor) ]
.
(D7)
Bargain 7
= ATC Number
= ROIC × √( EPS × ROIC_ratio × NCAVPS )
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Reference :