I’ve just finished updating my stock valuation spreadsheet. Here are some highlights of version 2.0. Value is calculated using the twenty-year discounted cash flow method. It uses ten years of financial statements instead of five. Free cash flow is estimated using Warren Buffet’s “owner earnings” instead of the free cash flow reported on the company’s cash flow statement. The company’s growth rate is estimated using 75% of the company’s average cash return on invested capital (CROIC) over the past ten years.
Because this is a google spreadsheet, it can be run on any computer with an internet browser and does not require expensive software like Microsoft Excel. To use the spreadsheet, simply enter the ticker symbol for the company you want to investigate on the ‘Summary’ sheet and press enter. The code automatically downloads ten years of financial data and calculates a per share value for the company. This spreadsheet does in 5 seconds what used to take me about an hour. There are several preferences you can modify to change how conservative you wish to be in your analysis. Click here to download the spreadsheet. The images below are examples of the output generated by the spreadsheet.
My spreadsheet is free while other valuation spreadsheets on the internet cost money (see for example Old School Value) because of its simple design and limited functionality, and I am offering it without a guarantee that it will work for all companies. I tested it and it works for most of the DJIA companies so long as they had (mostly) positive owner earnings during the last ten years. You probably don’t want to invest is companies that have had negative owner earnings recently anyways. It is meant for academic purposes only and any investing decisions should be based on a thorough analysis of the prospective company’s financial statements and fillings. That said, if you have any problems with the spreadsheet, leave a comment on one of my stock valuation posts and I will try to help you out.
You must have a Google account to view and copy the spreadsheet. The spreadsheet is initially read only. Open the spreadsheet and select File > Make a copy... and save it to your Google Drive with whatever name you wish. Now you can change the ticker symbol and default parameters to begin valuing companies.
