Key Insights
- Nova Cannabis’ estimated fair value is CA$1.84 based on 2 Stage Free Cash Flow to Equity
- Current share price of CA$0.99 suggests Nova Cannabis is potentially 46% undervalued
- Nova Cannabis’ peers seem to be trading at a lower discount to fair value based onthe industry average of 27%
In this article we are going to estimate the intrinsic value of Nova Cannabis Inc. (TSE:NOVC) by taking the expected future cash flows and discounting them to today’s value. We will use the Discounted Cash Flow (DCF) model on this occasion. Don’t get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company’s value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in…
