This short tutorial is designed to walk you through each step of valuing a company on the Intrinio Valuation Webapp.
The Valuation platform enables you to scenario test the value of companies under different circumstances. For example, you could run and save three different valuations that show the value of a company as a base case, bearish/downside or bullish/upside.
In this tutorial, we're going to calculate the intrinsic value of Tiffany & Co. (NYSE: TIF) under the scenario of a recession in 2016.
If you haven't heard of Fintech in the past few years, you're probably living in a Faraday cage. Fintech companies use technology to disrupt existing financial services. This entrepreneurial industry has sprung from disgruntled financial employees and even large banks themselves, bleeding into an industry that has historically resisted change, technology, and innovation. It encompasses everything from payments to trading, and there is no question that Fintech innovations are stirring up controversy.
It used to cost (at a minimum) between $200 and $500 to execute a trade in the stock market. Today, due to the rise of companies like RobinHood, you can execute a trade for free. Transferring money overseas used to be an arduous and expensive process, taking weeks to execute. Now companies like TransferWise are performing these transactions for up to 10x less than the typical bank. Robo-advisors like Wealthfront are eliminating the need altogether (especially among millennials) for a financial advisor.
As value investors, we tend to live in the domain of spreadsheets. Value investing is the strategy of finding stocks that are undervalued relative to their intrinsic value, or inherent worth. The intrinsic value of a stock is the the sum of all cash flows that a company will generate in its perpetual existence, discounted at the weighted expected return of the debt and equity investors in the company. Traditionally, investors have used Microsoft Excel to build complex discounted cash flow (DCF) models to estimate the cash flows generated by the company and a weighted average cost of capital (WACC) model for estimating the weighted expected return for the firm. This practice is one of the primary activities of any financial/investment analyst and there is even a Financial Modeling World Championship to showcase the best of the best at this art.
While there are many reasons to build complex financial models in Excel, the intrinsic value of a company's stock can be calculated much more simplistically using a standardized system. This is what we've created at Intrinio. Our web application brings the flexibility of Excel onto the web without the complexity of a having to manage a spreadsheet filled with calculations or bad data. This makes it very easy for performing scenario testing, value driver analysis, or sensitivity testing. Merging this with an easy-to-use user interface, Valuation is exactly what value investors need to bring their investment analysis to the next level.
The previous video was presented at the Digital-Life-Design (DLD) Conference, which occurred in January of this year. In this 15 minute clip, Scott Galloway discusses the Four Horsemen of technology: Amazon, Apple, Facebook, and Google. Each has carved its own niche in the modern technology world and plays a major role in the lives of most Americans and even most people in the world. With 1.75 billion smartphones in the world connected through the internet via mobile networks and wi-fi, we can begin to grasp the power that these companies have to shape the future evolution of technology.
At Intrinio, we offer full access to a whole host of financial data on these companies through our API, Excel add-in and Google Sheets add-on. We have used Intrinio data to analyze the trends observed by Professor Galloway. You can find all the supporting data in the Four Horseman Google Sheet, which was gathered using the Intrinio Google Sheet add-on.
We have been hard at work over the past several months building the first investing community of its kind - a complete ecosystem for financial data and investment analysis. Intrinio features a robust and transparent Valuation WebApp, a comprehensive API with Excel Add-in, and a collaborative platform for discussing investment prospects.
While we still have much work to do, we are making our beta app available for testing and feedback. You have the opportunity to tell us exactly what you want us to build. This includes everything from views of certain data in the Webapp, to data sets delivered by the API/Excel Add-in, to companies you would like for us to cover.
We are in the process of writing documentation for everything, specifically the API and Excel Add-in, so in the mean time, please feel free to ask any questions in the Forum. We will do our best to respond within a few hours.
Thanks for the interest in Intrinio. We are very excited for what the next several months will bring.