Using conservative estimates and projections, I ran a quick discounted cash flow model on CAT stock. My results show the shares to be currently overvalued, relative to the company's future free cash flow generation.
I put a fair value of $114.35 on the stock.
Maybe he works for Sterne Agee who lowered their target on JOYG due to them raising 2012 Estimates and lowered PE.
Yeah thats right they lowered based on Joy increasing its earnings estimates.
Yes, you are correct.
Over the last many years, I have made many fair valuation postings, with the intention of providing others with a sort of starting point for doing their own due diligence and to share what I will be potentially buying or selling.
No, not really. Valuations like these are an important tool to help in deciding whether to buy a stock.
No, discounted cash flow models aren't perfect and they can have flaws. However, if one uses conservative numbers, cash flow models do lend insight into a stock's "true" price -- versus what Mr. Market says the stock is worth.
Also, these types of valuations are not a substitute for proper due diligence reseach.