As fundamental as intrinsic value modeling may seem, its surprising how few tools are available for individual consumer investors to put it into play. Such models are commonly used by value – oriented investing professionals, but, possibly due to their complexity and sticky assumptions like discount rates, they havent hit the mainstream.
The best tool available today, offered as a stand – alone Web site by Canadian – born and educated CFA Alexander Chepakovich, is iStockResearch.
The iStockResearch model is similar to the indefinite life model but is more complete. First, the site contains the financial data for most major U.S. companies, so you dont have to find it yourself. Second, rather than a split first – and second – stage growth pattern, the model allows a yearly decline or “decay” in growth rates – perhaps more realistic. Finally, it factors in stock option grants, and it supplies a recommended discount rate based on current economic conditions and the industry the company is part of. The results, as shown in Figure 4-3, are similar to the other models. Note that you can modify the growth and discount assumptions as you choose to get a range of acceptable modeling results.The site is free and easy to use, and it gives a complete set of raw financial data to help in other analysis. This site and set of tools is highly recommended for beginning and more experienced value investors.
