One of my readers, Ken, asked me this question:
Read your blog. Very good- I wonder if you do discounted cash flow analysis for the stocks you value (as opposed to the PE multiples approach).
If you do, then, how do you evaluate a company with decrease in earnings growth in the first year of projection?
Thanks for your input.
I gave Ken a very concise reply:
Try not to sweat the small stuff.
Any discounted cash flow analysis is at best, an estimate.
That is why it is important to factor in a margin of safety into the derived intrinsic value.