Key Insights
- The projected fair value for DICK’S Sporting Goods is US$154 based on 2 Stage Free Cash Flow to Equity
- With US$173 share price, DICK’S Sporting Goods appears to be trading close to its estimated fair value
- The US$155 analyst price target for DKSis comparable to our estimate of fair value.
Today we will run through one way of estimating the intrinsic value of DICK’S Sporting Goods, Inc. (NYSE:DKS) by projecting its future cash flows and then discounting them to today’s value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Models like these may appear beyond the comprehension of a lay person, but they’re fairly easy to follow.
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 still have some burning questions about this…
