This whitepaper proposes an alternative use of the discounted cash flow valuation framework. It argues that reversing its logic-flow by solving for an implied required rate of return (starting from observed share prices), an analyst of liquid public equities can uncover differentiated insight compared to the traditional approach.
The paper goes on to look at how one might leverage readily available consensus numbers to derive this market-informed return measure and how changes through time reflect revised expectations and/or changing market preferences.
This Whitepaper:
- Looks at the basics of the traditional approach,
- Proposes a new framing,
- and Shows how it can implemented with consensus expectations
About the Author
Vlad Vasilescu
Manager, Investment Research
Vlad Vasilescu is a manager within the Financial Services business unit of Evalueserve Romania. He is currently supporting the Integrated Oil & Gas equity research team for a leading US-based investment bank, as well as leading internal initiatives within Evalueserve. Vlad previously worked in corporate strategy roles at HP Inc. and in equity research on the Romanian market. Vlad graduated from the Academy of Economic Studies in Bucharest, holding a Master’s Degree in European Economics and passed the CFA level III exam in 2019.