Discounted Cash Flow Calculation for LSE:DWF using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
LSE:DWF DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
DWF Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
DWF Group's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
DWF Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
DWF Group's earnings are expected to grow significantly at over 20% yearly.
DWF Group's revenue is expected to grow by 9.5% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
DWF Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Andrew Leaitherland is the Chief Executive Officer and Managing Partner at DWF Group PLC (formerly, DWF Group Limited) since May 2006 and is its Director and Member of Executive Board. Mr. Leaitherland serves as a Managing Partner, Chief Executive Officer and a Member of the Management Board at DWF Biggart Baillie. Mr. Leaitherland has been with DWF for seven years and in his previous position as head of HR horizons he created a highly respected department, which is the largest of its kind in the North West of England. He was awarded Managing Partner of the Year at the Legal Business Awards 2014 and the Financial Times recognised as one of the Top 10 innovative lawyers in Europe as a nominee for the Innovative Lawyer Awards in 2018. He holds an LLB degree from Lancaster University, together with an alumni award in 2013 for substantial contribution to the legal sector, and an LLM degree in employment law and industrial relations from the University of Leicester. He is a member of the Law Society of England and Wales and is a registered foreign lawyer with the Law Society of Scotland.
Insufficient data for Andrew to compare compensation growth.
Insufficient data for Andrew to establish whether their remuneration is reasonable compared to companies of similar size in United Kingdom of Great Britain and Northern Ireland.
Management Team Tenure
Average tenure of the
management team in years:
The average tenure for the DWF Group management team is less than 2 years, this suggests a new team.
CEO, Managing Partner
CFO, Member of Executive Board & Director
CEO of International Division & Member of Executive Board
CEO of Commercial Services Division
CEO of Managed Services & Member of Executive Board
Head of Connected Services & Member of Executive Board
CEO of Insurance Services & Member of Executive Board
Chief Information Officer & Member of Executive Board
Marketing & Client Development Director and Member of Executive Board
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the DWF Group board of directors is less than 3 years, this suggests a new board.
DWF Group plc provides various legal services and complementary connected services in the United Kingdom and internationally. The company operates through four divisions: Commercial Services, Insurance, International, and Connected Services. It offers a range of complex legal services and managed services to multinationals, government and public sector bodies, and high net worth individuals in the areas of corporate, litigation, and real estate practice groups. The company also offers a range of complex legal services and managed services to insurers, insurance intermediaries, and corporations in various practice groups comprising catastrophic personal injury, occupational health, and casualty; motor, fraud, resolution law, and in-house teams; and professional indemnity and commercial insurance. In addition, it provides a range of professional, business, or consulting services. The company offers software solutions to insurers, brokers, retailers, energy, construction and engineering companies, professional service firms, public sectors, local governments, and housing associations, as well as provides technical consulting services. The company was incorporated in 2018 and is based in London, the United Kingdom.
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