We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. In the first stage we need to estimate the cash flows to the business over the next ten years. Generally the first stage is higher growth, and the second stage is a lower growth phase. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. View our latest analysis for Transocean Holdings Bhd The Method If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. However, a DCF is just one valuation metric among many, and it is not without flaws. We generally believe that a company's value is the present value of all of the cash it will generate in the future. It may sound complicated, but actually it is quite simple! The Discounted Cash Flow (DCF) model is the tool we will apply to do this. ( KLSE:TOCEAN) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the forecast future cash flows of the company and discounting them back to today's value. Transocean Holdings Bhd's peers are currently trading at a premium of 632% on averageĭoes the May share price for Transocean Holdings Bhd. Using the 2 Stage Free Cash Flow to Equity, Transocean Holdings Bhd fair value estimate is RM2.28Ĭurrent share price of RM2.03 suggests Transocean Holdings Bhd is potentially trading close to its fair value
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