10 Comments

Excellent post, enjoyed reading.

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great take, thank you!

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Great article, congrats. One doubt about valuation which is the rational behind assuming 15% discount rate for projected period & exit rate 3-3-5% for terminal value? It is something that i have seen before in other analysts but i did not get it. Thanks

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Mar 26, 2023·edited Mar 26, 2023

Thank you for another great post! Nevertheless, I used to calculate FCF as Cash from Ops - CapEx but I learned 2 things:

1) If you want you to use CapEx you need to consider only Maintenance CapEx and not growth CapEx. For this, normally (as Bruce Greenwald who is a renowned professor) you could use D&A as a proxy. Have not done the analysis but I guess you would get a really different number.

2) You would be more accurate by using the FCFF or FCFE calculations from Aswath Damodaran. I tend to use FCFF as it is the cash to all claim holders and for that, you start with NOPAT and remove investments in future growth (you can check as well Michael Mauboussin on this subject).

Those analysis would give you a more precise insight into Constellation valuation in my humble opinion.

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Thanks for sharing amazing insights! You quick check is my months of research 🙏😃

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