Would you purchase a private company for $1m that earned $6,600 in the past twelve months? Well that's what you're getting right now if you buy $NFLX - a big fat earnings yield of 0.66%. Don't worry though, this is the "new" economy.
I use DCF to forecast. Growth faster than 25% is a no, unless it's painfully undervalued by conservative measures. I could care less about a few years of earnings; there's no rational way I could forecast $1m for normalized $6,600 absent sum-of-the-parts/net-net
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DCF is definitely the best approach - but don’t just don’t extrapolate from recent years. Understand the business and build the model. You might be surprised how much FCF power a low earnings company can have in a few years. Good luck
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Would you mind explaining how one would reliably extrapolate into the future absent recent history, beyond event-driven special situations? RIP low-risk high uncertainty; MoS today, knowing tomorrow won't work out perfectly; acquisitions & expansions generally unreliable.
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