Value Express: Calculate Target Prices Based on Your Expectations

Value Express is an Excel tool that allows you to plug in your own expectations and insights about future performance to determine a stock’s current value.

In the first mode, EVA is forecast by simply multiplying together projections for sales growth and the EVA/Sales margin over the next five years.  Without having to forecast cash flows or balance sheets, you can accurately calculate a company’s discounted cash flow value. The company’s sales growth rates and EVA margins over the past five years, benchmarked against industry peers and the Russell 3000 universe, are displayed for reference.

Value Express: Calculate Target Prices Based on Your ForecastIn the second more sophisticated mode, the EVA margin is determined by your assumptions for about 20 underlying performance factors like operating margins, capital turns, tax rates, acquisition premiums and the like.  Changes in any of the performance factors ripple through the entire system, making it easy to simulate the incremental impact of key drivers and to work backwards and establish a set of performance targets that are priced into the current share price.

You can input up to three forecast scenarios and compare them side by side.

In both modes, Value Express automatically prepares an initial five-year forecast by extrapolating past trends.  You can easily modify the initial assumptions and can use any of five available techniques to extend the projection of EVA beyond the fifth period and determine a “terminal value” that you believe is most realistic.