Insight Article Desktop Banner
 
 
Consilient Observer
  •  
August 03, 2021

Everything Is a DCF Model

Insight Video Mobile Banner
 
August 03, 2021

Everything Is a DCF Model


Consilient Observer

Everything Is a DCF Model

Share Icon

August 03, 2021

 
 

A Mantra for Valuing Cash-Generating Assets

  • We suggest the mantra “everything is a DCF model.” Whenever investors value a stake in a cash-generating asset, they should recognize they are using a discounted cash flow (DCF) model.
  • This suggests a mindset that is very different from that of a speculator, who buys a stock in anticipation that it will go up without reference to its value.
  • The topic deserves attention because many market participants don’t think DCF models are relevant, and many use heuristics for value without recognizing the purpose and limitations of the shorthands.
  • The intrinsic value, determined by the present value of future cash flows, attracts the price like a magnetic force. This means it is useful for investors to keep in mind the value drivers of a discounted cash flow model.
 
Article Team Image
 
Counterpoint Global’s culture fosters collaboration, creativity, continued development, and differentiated thinking.
 
 

Subscribe to Counterpoint Global Insights - Consilient Observer

Please enter the code sent to your email address.

Valid for 10 minutes only

Confirm
Email Not Sent
 
 
Submit
 
 
 
 
 

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

This material is for the benefit of persons whom the Firm reasonably believes it is permitted to communicate to and should not be forwarded to any other person without the consent of the Firm. It is not addressed to any other person and may not be used by them for any purpose whatsoever. It is the responsibility of every person reading this material to fully observe the laws of any relevant country, including obtaining any governmental or other consent which may be required or observing any other formality which needs to be observed in that country.

This material is a general communication, which is not impartial, is for informational and educational purposes only, not a recommendation to purchase or sell specific securities, or to adopt any particular investment strategy. Information does not address financial objectives, situation or specific needs of individual investors.

Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.

For the complete content and important disclosures, refer to the article pdf.

© 2022 Morgan Stanley. All rights reserved.

 

This is a Marketing Communication.

It is important that users read the Terms of Use before proceeding as it explains certain legal and regulatory restrictions applicable to the dissemination of information pertaining to Morgan Stanley Investment Management's investment products.

The services described on this website may not be available in all jurisdictions or to all persons. For further details, please see our Terms of Use.


Subscriptions    •    Privacy & Cookies    •    Your Privacy Choices Your Privacy Choices Icon    •    Terms of Use

©  Morgan Stanley. All rights reserved.