29 min
Long Term Growth Rate Assumptions: How to Calibrate using SEC 10k Disclosures The DIY Investing Podcast
-
- Investing
Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.
Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
You can find out more information by listening to episode 11 of this podcast.
Long-Term Growth Rate Assumptions - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode25
What is a long-term growth rate assumption: A key component of a discounted cash flow calculation. (Along with Discount Rate [Ep.23] and Owner's Earnings[Ep.26]) How much growth a company can expect in its earnings over an infinite time horizon. How you can make long-term growth rate assumptions Bounds: 0% lower bound (no growth) 5%-6% upper bound (nominal GDP growth rate) Key components: Inflation Population Growth Productivity Growth Don't assume that a company can grow faster than the economy in the long-term. How to calibrate long-term growth rate assumptions based on management's regulatory disclosures Example: Omnicom (OMC) Using management's forecasts of 4% long-term growth rates, I lowered my growth forecast from 5% (matching nominal GDP growth) to match the 4% forecast by management. This lowered my calculated intrinsic value by 13% for Omnicom stock. Read the full Omnicom Intrinsic Value Report ($10/month - Patron Exclusive Benefit) [Become a Patron here] References: Omnicom's 2018 10k - Required Management Disclosures (pg. 11)
Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a review. Your feedback helps me to improve the podcast and grow the show's audience.
Support the Podcast on Patreon This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
You can find out more information by listening to episode 11 of this podcast.
Long-Term Growth Rate Assumptions - Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode25
What is a long-term growth rate assumption: A key component of a discounted cash flow calculation. (Along with Discount Rate [Ep.23] and Owner's Earnings[Ep.26]) How much growth a company can expect in its earnings over an infinite time horizon. How you can make long-term growth rate assumptions Bounds: 0% lower bound (no growth) 5%-6% upper bound (nominal GDP growth rate) Key components: Inflation Population Growth Productivity Growth Don't assume that a company can grow faster than the economy in the long-term. How to calibrate long-term growth rate assumptions based on management's regulatory disclosures Example: Omnicom (OMC) Using management's forecasts of 4% long-term growth rates, I lowered my growth forecast from 5% (matching nominal GDP growth) to match the 4% forecast by management. This lowered my calculated intrinsic value by 13% for Omnicom stock. Read the full Omnicom Intrinsic Value Report ($10/month - Patron Exclusive Benefit) [Become a Patron here] References: Omnicom's 2018 10k - Required Management Disclosures (pg. 11)
29 min