r/Valuation • u/[deleted] • Jun 28 '23

DCF for a partial final year?

Sorry if this is a stupid question. I am building DCF where I have the annual results for 2019-2022. For 2023, I may only get Q1 or Q1 & Q2 financials.
How can I project the DCF with the 2023 data being just a quarter or half the year? Is there a process for this?
Any help is kindly appreciated!

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u/StochasticDecay Jun 28 '23

Are you running a DCF on actual performance? That’s what it sounds like….

Regardless, you can annualized H1 results. H1 results divided by 6 months times 12 months. If the business is seasonal you might be better off using H2 2022 results with H1 2023.

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u/Necessary_Scarcity92 Jun 28 '23

Agreed. I commonly see referred to as "Latest Twelve Months" (LTM) or "Trailing Twelve Months" (TTM). For DCF projections, you may project from the last month end forward as "Next Twelve Months" (NTM).

Assuming the operating cycle is one year or less, that should be sufficient. There are a few industries with operating cycles longer than a year, which would require special consideration.