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I was wondering, what is the consensus on what the best method for finding intrinsic value is?


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    This article indicates that Buffett pays attention to Return on Equity most, so how much revenue a company can generate per dollar invested in them. He also looks for low leverage and high profit margins.

    That said, intrinsic value is a fool’s idea, because it means that companies have a “true” value that is not exactly reflected in their share price. If that were true, and the market (eventually) learned that, then you could profit on every single trade.

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      My understanding is that practitioners generally do not use a single method, but a mix of multiple ones to arrive to a “range” of values. So to answer your question, I don’t think there’s a “general consensus” on this as intrinsic value is intensely subjective and dominated by different variables and factors.

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        To add that investment bankers call this a football field graph. Generally, it’s composed of a DCF, public comparables (“comps”) and precedent transactions. Generally, the value of the company you will get using each methodology will be DCF > Precedent transactions > Comps.

        This just shows that there is no such thing as company intrinsic value. Moreover, the value will be different for each buyer: a strategic buyer can achieve synergies so is willing to pay more, whereas a financial investor will pay less as there are no synergies to be achieved.