I see you valued Mecado Libre by predicting its futute earnings. However, the FCF of Mercado is way higher than its earnings. Doesn’t it make more sense to predict the FCF and use that for the valuation?
Certainly that is an option, i choose to go with the earnings method. There is no right answer in valuations, nobody knows the future, so its more art than science. As long as your assumptions make sense the result should be similar.
I see you valued Mecado Libre by predicting its futute earnings. However, the FCF of Mercado is way higher than its earnings. Doesn’t it make more sense to predict the FCF and use that for the valuation?
Certainly that is an option, i choose to go with the earnings method. There is no right answer in valuations, nobody knows the future, so its more art than science. As long as your assumptions make sense the result should be similar.
Would you try it out to see if it indeed yields the same result? I’m curious. Would be a good exercise. You never know you discover something new.
Btw, thanks for the very nice analysis, Ray!!!
Nice!! Great Analysis
Glad you enjoyed it Blake