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Investment Analysis Clubs Where Angels Fear to Tread
101

When doing DCFs, can we source opinions on how people forecast growth rates. Here is my question

  1. When valuing companies which are high growth and are somewhat FCF positive (with high FCF margins), what would be your recommendation in terms of forecasting their FCF growth rates. Are their any industry standard ranges you can point us to? For instance, lets look at ServiceNow or Crowdstrike, whose current FCF growth are around 20% and 40% respectively, how would you model them in the future? Do you take a comparable approach for these companies which are in relatively new industries (and compare them to the MSFT and Apple’s of the world) or is there another approach to value them appropriately?
  2. Similarly, what sort of terminal FCF multiple one should be assigning? Should we be looking at industry stalwarts or is there a more educated approach to doing that?
    Thanks again for all the help.