Have enjoyed reading the valuable contributions to this thread for the last couple of years and finally found the time to try and learn how to do a DCF valuation.
I'm going by the method in
Fundamental Analysis for Dummies - (Matt Krantz) gotta start somewhere right?
Wondering if you knowledgeable guys/gals had any ideas on what to do when the FCF for the most recent period is negative? Which is what I have for HBL currently at -40,706 (gathered from here
http://tinyurl.com/zxed2pj)
I tried using an average from the last 5 years, which yields a positive result, but also ends up giving me a valuation of about 2.70!
Some more data.. would be good to know if I'm on the right track.
Discount Rate: 0.09166
CAPM Discount Rate = risk free rate + (expected market return – risk free rate) x stock beta
Risk free rate: 0.0248 (from the Treasury website)
Expected market return: 0.0885 (averaged NZSE return since 1971)
HBL stock beta: 1.05 (Reuters/Financial Times)
Assumed a long term growth rate of 2% and an intermediate term growth rate of 10%
Thanks for any thoughts and help
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