Fellow value investors,
I’ve mostly used traditional DCFs, but lately I’ve been thinking in a decomposition framework:
* Enterprise Value = Invested Capital (capital in place) + PV of value from existing operations (earnings power / competitive advantage) + market-implied value of future growth.
* Implied return = cash yield + growth
Do you use a similar breakdown? If yes, how do you implement it in practice? If not, what’s your go-to quantitative approach for value investing?