公司理财第6章

1、Stock ValuationChapter 6Key Concepts and SkillsoUnderstand how stock prices depend on future dividends and dividend growthoBe able to compute stock prices using the dividend growth modeloUnderstand how growth opportunities affect stock valuesoUnderstand the PE ratiooUnderstand how stock markets work

2、Chapter Outline6.1The Present Value of Common Stocks6.2Estimates of Parameters in the Dividend-Discount Model6.3Growth Opportunities6.4The Dividend Growth Model and the NPVGO Model 6.5Price-Earnings Ratio6.6Some Features of Common and Preferred Stock6.7The Stock Markets6.1 The PV of Common StocksoTh

3、e value of any asset is the present value of its expected future cash flows.oStock ownership produces cash flows from: nDividends nCapital GainsoValuation of Different Types of StocksnZero GrowthnConstant GrowthnDifferential GrowthCase 1: Zero GrowthoAssume that dividends will remain at the same lev

4、el foreverRPRRRPDiv)1 (Div)1 (Div)1 (Div03322110321DivDivDivSince future cash flows are constant, the value of a zero growth stock is the present value of a perpetuity:Case 2: Constant Growth)1 (DivDiv01gSince future cash flows grow at a constant rate forever, the value of a constant growth stock is

5、 the present value of a growing perpetuity:gRP10DivAssume that dividends will grow at a constant rate, g, forever, i.e., 2012)1 (Div)1 (DivDivgg3023)1 (Div)1 (DivDivggConstant Growth ExampleoSuppose Big D, Inc., just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If

6、 the market requires a return of 15% on assets of this risk level, how much should the stock be selling for?oP0 = .50(1+.02) / (.15 - .02) = $3.92Case 3: Differential GrowthoAssume that dividends will grow at different rates in the foreseeable future and then will grow at a constant rate thereafter.

7、oTo value a Differential Growth Stock, we need to:nEstimate future dividends in the foreseeable future.nEstimate the future stock price when the stock becomes a Constant Growth Stock (case 2).nCompute the total present value of the estimated future dividends and future stock price at the appropriate

8、 discount rate.Case 3: Differential Growth)(1DivDiv101gAssume that dividends will grow at rate g1 for N years and grow at rate g2 thereafter. 210112)(1Div)(1DivDivggNNNgg)(1Div)(1DivDiv1011)(1)(1Div)(1DivDiv21021gggNNN.Case 3: Differential Growth)(1Div10gDividends will grow at rate g1 for N years an

9、d grow at rate g2 thereafter 210)(1DivgNg )(1Div10)(1)(1Div)(1Div2102gggNN0 1 2NN+1Case 3: Differential GrowthWe can value this as the sum of: an N-year annuity growing at rate g1TTARggRCP)1 ()1 (111plus the discounted value of a perpetuity growing at rate g2 that starts in year N+1NBRgRP)1 (Div21NC

10、ase 3: Differential GrowthConsolidating gives:NTTRgRRggRCP)1 (Div)1 ()1 (121N11Or, we can “cash flow” it out.A Differential Growth ExampleA common stock just paid a dividend of $2. The dividend is expected to grow at 8% for 3 years, then it will grow at 4% in perpetuity. What is the stock worth? The

11、 discount rate is 12%.With the Formula3333)12. 1 (04.12.)04. 1 ()08. 1 (2$)12. 1 ()08. 1 (108.12.)08. 1 (2$P3)12. 1 (75.32$8966.154$P31.23$58. 5$P89.28$PWith Cash Flows08).2(1$208).2(1$0 1 234308).2(1$)04. 1 (08).2(1$316. 2$33. 2$0 1 2 308.62. 2$52. 2$89.28$)12. 1 (75.32$52. 2$)12. 1 (33. 2$12. 116.

12、 2$320P75.32$08.62. 2$3PThe constant growth phase beginning in year 4 can be valued as a growing perpetuity at time 3.6.2 Estimates of ParametersoThe value of a firm depends upon its growth rate, g, and its discount rate, R. nWhere does g come from?g = Retention ratio Return on retained earningsWher

13、e does R come from?oThe discount rate can be broken into two parts. nThe dividend yield nThe growth rate (in dividends)oIn practice, there is a great deal of estimation error involved in estimating R.Using the DGM to Find RoStart with the DGM:gPD gPg)1(D Rg-RDg - Rg)1(DP0100100Rearrange and solve fo

14、r R:6.3 Growth OpportunitiesoGrowth opportunities are opportunities to invest in positive NPV projects.oThe value of a firm can be conceptualized as the sum of the value of a firm that pays out 100-percent of its earnings as dividends and the net present value of the growth opportunities.NPVGOrEPSP6

15、.4 The NPVGO Model oWe have two ways to value a stock:nThe dividend discount modelnThe sum of its price as a “cash cow” plus the per share value of its growth opportunitiesThe NPVGO Model: Example Consider a firm that has EPS of $5 at the end of the first year, a dividend-payout ratio of 30%, a disc

16、ount rate of 16%, and a return on retained earnings of 20%.oThe dividend at year one will be $5 .30 = $1.50 per share. oThe retention ratio is .70 ( = 1 -.30), implying a growth rate in dividends of 14% = .70 20%.From the dividend growth model, the price of a share is:75$14.16.50. 1$Div10gRPThe NPVG

17、O Model: Example First, we must calculate the value of the firm as a cash cow.25.31$16.5$EPS0RP Second, we must calculate the value of the growth opportunities.75.43$14.16.875$.16.20.50. 350. 30gRP Finally, 75$75.4325.310P6.5 Price-Earnings RatiooMany analysts frequently relate earnings per share to

18、 price.oThe price-earnings ratio is calculated as the current stock price divided by annual EPS.nThe Wall Street Journal uses last 4 quarters earningsEPSshareper Priceratio P/E6.6 Features of Common StockoVoting rights (Cumulative vs. Straight)oProxy votingoClasses of stockoOther rightsnShare propor

19、tionally in declared dividendsnShare proportionally in remaining assets during liquidationnPreemptive right first shot at new stock issue to maintain proportional ownership if desiredFeatures of Preferred StockoDividendsnStated dividend must be paid before dividends can be paid to common stockholder

20、s.nDividends are not a liability of the firm, and preferred dividends can be deferred indefinitely.nMost preferred dividends are cumulative any missed preferred dividends have to be paid before common dividends can be paid.oPreferred stock generally does not carry voting rights.6.7 The Stock Markets

21、oDealers vs. BrokersoNew York Stock Exchange (NYSE)nLargest stock market in the worldnMembersoOwn seats on the exchangeoCommission brokersoSpecialistsoFloor brokersoFloor tradersnOperationsnFloor activityNASDAQoNot a physical exchange computer-based quotation systemoMultiple market makersoElectronic Communications NetworksoThree levels of informationnLevel 1 median quotes, registered representativesnLevel 2 view quotes, brokers & dealersnLevel 3 view and