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Discounted Cash FlowSimply Wall St
•85% Informative
O'Reilly Automotive's US$ 1,040 share price indicates it is trading at similar levels as its fair value estimate.
We use what is known as a 2 -stage model, which simply means we have two different periods of growth rates for the company's cash flows.
We discount the sum of these future cash flows to today 's value at a cost of equity of 7.4% . We use this to reflect that growth tends to slow more in the early years than in later years .
DCF calculation is only one of many factors that you need to assess for a company.
For O'Reilly Automotive , we've compiled three further aspects you should look at.
Low debt, high returns on equity and good past performance are fundamental to a strong business.
You should be aware of the 3 warning signs we've uncovered before considering an investment.
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