19 companies matchUpdated with our data, free, no account

Undervalued on cash flow

Companies trading at least 25% below what our discounted cash flow model says the future cash is worth today.

Figure

Discount to fair value across the top 12 matches

Look at the spread, not the ranking. If the bars are all the same length, the screen is arbitrary: one point of discount to fair value separates a company that made the list from one that did not, and the cut is doing more work than the data supports. A long tail means the top few are genuinely exceptional and the rest merely qualified.

Figure

What this screen is really buying

Technology

Healthcare

Consumer

Communications

Energy

Financials

The matches are spread across sectors, which means the screen is selecting on the characteristic it claims to and not accidentally on an industry.

Company	Price	P/E	Yield	Moat	Rating
SOL.JO Sasol	R114.00	6.0	4.8%	48	52
MRK Merck & Co.	$82.00	17.0	3.5%	75	66
INTC Intel Corp.	$22.00	N/A	1.5%	55	42
ADBE Adobe Inc.	$420.00	30.0	0	83	71
PFE Pfizer Inc.	$28.30	11.0	5.9%	60	61
BATS.L British American Tobacco	£31.20	9.0	8.0%	72	66
NKE Nike Inc.	$75.00	22.0	2.0%	77	62
GSK.L GSK plc	£14.60	9.5	4.0%	71	68
MTN.JO MTN Group	R126.00	15.0	2.6%	65	63
NPN.JO Naspers	R4,310.00	24.0	0.5%	74	68
VOD.L Vodafone Group	£0.72	11.0	5.5%	55	55
DIS Walt Disney Co.	$115.00	22.0	0.8%	75	64
SHEL.L Shell plc	£29.10	9.2	4.1%	63	64
SBK.JO Standard Bank Group	R236.00	9.5	5.2%	68	67
DGE.L Diageo	£24.10	17.0	3.4%	80	66
HSBA.L HSBC Holdings	£7.10	8.5	5.8%	66	66
TMO Thermo Fisher Scientific	$520.00	33.0	0.3%	80	68
MU Micron Technology	$130.00	20.0	0.5%	65	64
QCOM Qualcomm Inc.	$165.00	16.0	2.0%	72	66

Educational information, not financial advice, and not a recommendation to buy anything. A screen is a place to start reading, never a place to stop.

Why this screen works

A business is worth the cash it will produce, converted into today's money. That is not a theory of value, it is the definition of it.

This screen finds companies where the market price sits meaningfully below that figure. It is the most defensible starting point in valuation, and it is also the one most easily abused, which is why the method and the failure mode below are not optional reading.

The exact screen

Fair value estimated by our DCF model, which is ported from the original Python valuation engine.
Price at least 15% below that fair value.
Excludes companies where we hold too few of the model's inputs to produce a figure we would defend.

Companies where we hold too little data to judge are excluded rather than quietly ranked.

When this screen is wrong

A DCF is an argument, not a measurement. Typically 60 to 80% of the answer sits in the terminal value, which is the part representing everything after the forecast ends, which is the part nobody can forecast.
The market is often right. A company can look cheap on a model precisely because the model has not yet noticed that the business is deteriorating. Cheap and undervalued are different words.
Cyclicals will appear here at the top of their cycle, when earnings are peaking and about to collapse. Check where the cycle is before you check the discount.

Understand it properly

DCF Discounted cash flow, without the spreadsheet fear How to find undervalued stocks Normalised earnings: valuing a business through the cycle