Discounted Cash Flow (DCF) models are ubiquitous in funds management. They tend to be time consuming to build, but when it comes to company valuation they are the gold standard, providing a comprehensive and elegant framework by which cash flow forecasts can be translated into estimates of value. Continue…

by Tim Kelley Posted in Insightful Insights.

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It has been an interesting few weeks in global equity markets. In Australia, as in other countries, we have seen some violent swings in equity prices, with most of the swings being in a generally downward direction. Continue…

by Tim Kelley Posted in Insightful Insights, Market Valuation.

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Reporting season is well underway now, and if you had to sum up progress to date in a single word you might choose something like “disappointing”. Continue…

by Tim Kelley Posted in Companies, Insightful Insights.

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Cochlear (ASX: COH) shares took a step back this week following an underwhelming full year profit report. While the business continues to grow, the market expected more, and some scale back of FY16 expectations was required. Continue…

by Tim Kelley Posted in Health Care, Insightful Insights.

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There are some good reasons to be concerned about the Australian economy at the moment. With commodity prices taking a nosedive and the Chinese stock market falling sharply, our nation’s strategic positioning of being highly dependent on China is looking less-than-ideal for the years ahead. Continue…

by Tim Kelley Posted in Companies, Insightful Insights.

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When you last bought a parcel of shares, were you investing or speculating? The term speculation carries some negative connotations, evoking thoughts of risk and recklessness, and is probably not one many of us would want to identify with. It’s a distinction that often arises in financial journalism and marketing, with money managers typically laying claim to the investor label to convey that what they are doing is good, wholesome and professional, and not prone to misadventure. Continue…

by Tim Kelley Posted in Insightful Insights, Investing Education.

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In an earlier post here, we highlighted the importance of earnings growth to company valuation. The unsurprising conclusion was that a business that is able to maintain steady growth over an extended period of time can accumulate tremendous value.

Today we look at it from another, more quantitative angle, and ask how useful historical growth rates are as an indicator of future investment merit. Continue…

by Tim Kelley Posted in Investing Education, Market commentary.

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In theoretical terms, company valuation is a simple enough concept. The value of any company should equate to the present value of all the dividends that the company will pay over its lifetime. Continue…

by Tim Kelley Posted in Insightful Insights, Investing Education.

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