As part of an upgrade to the portfolio optimization template, we’ve added a new feature to the financial market data feed. A new Value tab allows the discounted cash flow valuation of securities and comparison with market capitalization to evaluate whether the security is under or overvalued.
The process downloads last filed fundamental operating data for the company along with prevailing consensus analyst earnings estimates. Non-operating items are adjusted to the last known earnings financials and cash flow is forecast forward using consensus analyst growth assumptions. Industry data is then used to calculate the cost of capital and discount the future cash flows to calculate a fair value for the security.
The automatic under and over valuation solution has been built so that multiple symbols can be processed in order to list and rank potential investment opportunities based on relative value to the market price.
Update 23 May 2017: This solution has been updated following changes to the data source and the Value tab is now deprecated. Stock market data can be downloaded as usual.