Intrinsic Value Discounts
The definition of intrinsic value is simple; its the present value of all future cash flows. It gets far less exact and simple when you have to estimate the discount rate, growth rate and time frame for those future cash flows coupled with a terminal value but any small miscalculation can generate horrible results and a useless value conclusion.
For tonight’s post there is no need or benefit to struggle over trying to develop a more precise calculation of owner’s earnings, discount rates or the irregular flow of owner’s earnings. But in the future post it would be helpful to dig deeper into the impact and definition of these deceptively basic few inputs for our intrinsic value calculation. But just because we spend more time is developing a more involved method to forecast these inputs does not mean a more accurate or trust worthy conclusion.
Try keeping the inputs simple and conservative in your model. These ideas below are only a few that I believe are trading below their intrinsic value. Some are at a discount because the terminal value is large but the cash flow stream until that terminal value is realized are weak, others can have a stable steady cash flow stream or a fast growing cash flow. You get the idea but the topic can get interesting and give us an edge if we find an input that has tremendous but overlooked value but the market is unwilling to wait or misunderstood.
Now for a few ideas;
I will provide some quanitative support tonight. But i wanted to post something now because i believed there is value in the information below;
ATC: Cycle Country Accessories
Price = .40
FLXS: Flexsteel Industries
Price = 15.11
PRLS: Peerless Systems Corp
Price = 3.25
KEQU: Kewaunee Scientific Corporation
Price = 10.42
JBSS: John B. Sanfilippo & Son, Inc
Price = 9.06
TFCO: Tufco Technologies
Price = 3.95
TRT: Trio-Tech International Common
Price = 3.63
Source:
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