When we implement discounted cash flow analysis and end up computing the price per share which is different than the observed market price per share that was used in my valuation to compute wacc weights and beta levered (assume the price obtained is 20 dollars and the market price per share is 50 dollars), aren't we using in this case wrong inputs in our valuation?

Question

When we implement discounted cash flow analysis and end up computing the price per share which is different than the observed market price per share  that was used in my valuation to compute wacc weights and beta levered (assume the price obtained is 20 dollars and the market price per share is 50 dollars), aren't we using in this case wrong inputs in our valuation?

anonymous · Answer

Maybe you didn't pay attention to some details when you were calculating growth perspectives? Maybe the industry has a great future? ( mb my advice is too obvious, but once or twice I made such mistakes :) )

anonymous · Answer

:). I mean when your intrinsic price per share is different than the market price per share wouldn't be problematic that your weights in wacc are based on a number that you don't think it is true?

anonymous · Answer

remember that it is the intrinsic value; if it's far apart it would be over/undervalued, if u've made a sound and good assumption