We calculate capital efficiency based on multiple methods including capital turns and NWC delta as percent of revenue delta.
We calculate capital efficiency based on multiple methods including capital turns and NWC delta as percent of revenue delta.
We project net working capital and fixed assets separately. Those projections leverage up to 18 years of invested capital history.
Our methodology for making projections focuses on staying aligned with historical trends, which, per above, we measure in multiple ways.
Our approach to valuation focuses on quantifying the market's future cash flow expectations in securities prices rather than making our own predictions on future cash flows. In other words, we prefer to be a critic of Mr. Market as a fortuneteller for future cash flows rather than be a fortuneteller ourselves. This white paper and video explain exactly how our discounted cash flow (DCF) valuation models work, and how our clients use them to get the best insight possible into the future cash flow implications of their target prices and market prices.
Accordingly, our reverse DCF models do not require us to be accurate forecasters. As long as we project a reasonable extrapolation of past performance, our models will always give us discreet insight into the market’s expectations for future cash flows and how those expectations compare to past performance.
Once armed with accurate information on the expectations baked into stock prices, investors can make prudent decisions about the valuation of securities.