Short Definition
A type of investing where the value of a company is determined by its ability to make cash. Future cash is projected using conservative estimates of potential. Risk factors are modeled as accurate as possible and are used in a quantitative form to measure the risk of the investment. The current stock value is the discounted future cash flow potential of the target company.
Value investing is an investment paradigm that derives from the ideas on investment and speculation that Ben Graham & David Dodd began teaching at Columbia Business School in 1928 and subsequently developed in their 1934 text Security Analysis. Although value investing has taken many forms since its inception, it generally involves buying securities whose shares appear underpriced by some form(s) of fundamental analysis. As examples, such securities may be stock in public companies that trade at discounts to book value or tangible book value, have high dividend yields, have low price-to-earning multiples or have low price-to-book ratios.
- Wikiwealth incorporates all value investing principles into each equity stock research report. Details of the value investing cash flow analysis is available at the bottom of each report.
Long Definition
See also
- Fair Value
- Free Cash Flow
- Present Value of Free Cash Flow
- Margin of Safety
- Weight Average Cost of Capital (WACC)
- Warren Buffett
See Related Analysis
See Related Resources
WACC Discount Rate
Templates
- Beta Calculator
- Adv Cash Flow Template
- Basic Cash Flow Model
- Warren Buffett Model
- 1 Stage FCFF
- 2 Stage FCFF
- 1 Stage FCFE
- 2 Stage FCFE
- 3 Stage FCFE
- FCFF vs FCFE Valuation
- FCFF with Negative Earnings
- FCFE with Capitalized R&D
- FCFF with Negative Earnings
- FCFF and EVA
- Equity Valuation of Bank
- FCFE with Option to Capitalize
