Master the most important tool in fundamental analysis: The Discounted Cash Flow (DCF) model.
In this tutorial, Alexander Velasquez demonstrates how to move beyond stock price "hype" and calculate the true intrinsic value of a company. Using McDonald’s (NYSE: MCD) as a case study, you will learn to:
Analyze Cash Flow: Extracting data from financial statements.
Project Growth: Using analyst forecasts for realistic modeling.
Calculate Risk: Determining the proper discount rate.
Find Fair Value: Arriving at a buy/sell price based on math, not emotion.
00:00 - Intro
00:47 - Step 1: Get the annual free cash flow.
05:59 - Step 2: Get the expected growth rate.
08:18 - Step 3: Multiply the annual free cash flow by it's expected growth rate.
09:54 - Step 4: Get the discount rate.
14:10 - Step 5: Get the residual value.
19:25 - Step 6: Discount all future cash flows to their present value.
21:24 - Step 7: Calculate the intrinsic value per share.
Alexander I. Velasquez is a financial analyst specializing in valuation, market history, and long-term investing. His research combines fundamental analysis with lessons from past financial crises. His work is published on Seeking Alpha.
