We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. To begin with, we have to get estimates of the next ten years of cash flows. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. See our latest analysis for Cogent Communications Holdings The Calculation If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Don't get put off by the jargon, the math behind it is actually quite straightforward. This will be done using the Discounted Cash Flow (DCF) model. ( NASDAQ:CCOI) as an investment opportunity by taking the expected future cash flows and discounting them to today's value. Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Cogent Communications Holdings, Inc.
