Author Topic: Excel Valuation Model  (Read 793 times)

nickenumbers

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Excel Valuation Model
« on: October 12, 2018, 07:07:23 PM »
Does anyone have an Excel valuation model that you would be willing to share?  A model that you could plug a series of future cash flows for a company, and run a DCF.  Maybe add assets, subtract debt, etc.

I have a couple basic no frills ones that work, and I have access to a lot of excessively complicated business school ones.

If anyone has something that they use when they want to 10K view or get into the weeds on a company's financial statements, I would enjoy seeing your approach.

Perhaps the world will repay you with high future returns for your contribution to fellow CoBF members.   ;)
The fastest Cheetah still waits for the lame baby antelope.  ..patience..


rb

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Re: Excel Valuation Model
« Reply #1 on: October 12, 2018, 10:05:12 PM »
If you want a simple DCF type stuff you can build a basic one in like 7 minutes.

I'm of the firm belief that models should be flexible because the world is complicated and models should reflect that. Something where u plug some numbers in and spits out an answer won't be that great.

Anyway, here's one that I've built when I was in grad school and I've used it on and off since then. It's a Bruce Greenwald type model. Would work better on asset heavy type companies. Have fun with it.

gary17

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Re: Excel Valuation Model
« Reply #2 on: October 12, 2018, 10:42:18 PM »
RB
i see you learned a lot about valuation in grad school
question for you
assuming ROIC > WACC , and  all else being equal, would you say a company with low ROIC and high growth is more valuable or a company with high ROIC but low growth?

Thanks
Gary

rb

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Re: Excel Valuation Model
« Reply #3 on: October 12, 2018, 10:57:32 PM »
RB
i see you learned a lot about valuation in grad school
question for you
assuming ROIC > WACC , and  all else being equal, would you say a company with low ROIC and high growth is more valuable or a company with high ROIC but low growth?

Thanks
Gary
Gary, honestly I didn't learn much about valuation in school that I didn't already know. It was fun though.

Anyway, there's no real answer to your question. As long as ROIC>WACC growth creates value. So you have Company A with a lower ROIC and high growth and Company B with high ROIC and low growth. If you assume ceteris paribus that both A and B have their ROIC>WACC then both crate value. Which one creates more value would depend on the relative differences between their ROICs and their growth rates.

gary17

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Re: Excel Valuation Model
« Reply #4 on: October 13, 2018, 07:03:29 AM »
I see. thanks
maybe I ask differently which one is a better business to own long term? my initial thought is high ROiC means the business has a stronger competitive advantage ; so if given the choice , id own the one with higher ROIC. 

SnarkyPuppy

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Re: Excel Valuation Model
« Reply #5 on: October 13, 2018, 09:49:24 AM »
I see. thanks
maybe I ask differently which one is a better business to own long term? my initial thought is high ROiC means the business has a stronger competitive advantage ; so if given the choice , id own the one with higher ROIC.

There's no one-size fits all way of looking at this.  In general, higher ROIC is better than lower ROIC (when ROIC>WACC).   But when analyzing a business, ROIC is simply one data point and even knowing ROIC alone from a quantitative perspective is insufficient.  Just as important is the sustainability of that ROIC - which requires qualitative assessments about the strength of the business unit economics, competitive advantage, management/customer/supplier incentives, and overall industry structure (e.g. product penetration rates).   

ROIC is definitely on average one of the more important data points to consider when analyzing a business.   I think more important though is to simply spend a lot of time analyzing businesses and learning how to identify key variables that drive value.  Every situation is different - and your ability to recognize and analyze the 2-3 key variables that will drive the value of the company can be a huge advantage.  And then buy at a cheap price. 

nickenumbers

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Re: Excel Valuation Model
« Reply #6 on: October 13, 2018, 04:02:43 PM »
If you want a simple DCF type stuff you can build a basic one in like 7 minutes.

I'm of the firm belief that models should be flexible because the world is complicated and models should reflect that. Something where u plug some numbers in and spits out an answer won't be that great.

Anyway, here's one that I've built when I was in grad school and I've used it on and off since then. It's a Bruce Greenwald type model. Would work better on asset heavy type companies. Have fun with it.

RB- Wow.  That thing is amazing!  Very well done, and I/we appreciate you sharing it.  I am going to dive into it.

I honestly find this CoBF group to be a huge value add to my thinking and my journey.  Of course no group is ever perfect, but what is?!  Generally like minded, smart, witty, rational, deep specialists and wide generalists [polymaths]. 

You CoBF folks are my TRIBE!  Thanks RB!
The fastest Cheetah still waits for the lame baby antelope.  ..patience..

rb

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Re: Excel Valuation Model
« Reply #7 on: October 14, 2018, 10:56:14 AM »
You're welcome.