中南财经政法大学《公司金融》课件-第8章股票估值

Chapter8StockValuationMcGraw-Hill/Irwin中南财经政法大学《公司金融》KeyConceptsandSkillsUnderstandhowstockpricesdependonfuturedividendsanddividendgrowthBeabletocomputestockpricesusingthedividendgrowthmodelUnderstandhowstockmarketsworkUnderstandhowstockpricesarequoted8-1ChapterOutlineCommonStockValuationSomeFeaturesofCommonandPreferredStocksTheStockMarkets8-2CashFlowsforStockholdersIfyoubuyashareofstock,youcanreceivecashintwowaysThecompanypaysdividendsYousellyourshares,eithertoanotherinvestorinthemarketorbacktothecompanyAswithbonds,thepriceofthestockisthepresentvalueoftheseexpectedcashflows8-3One-PeriodExampleSupposeyouarethinkingofpurchasingthestockofMooreOil,Inc.Youexpectittopaya$2dividendinoneyear,andyoubelievethatyoucansellthestockfor$14atthattime.Ifyourequireareturnof20%oninvestmentsofthisrisk,whatisthemaximumyouwouldbewillingtopay?ComputethePVoftheexpectedcashflowsPrice=(14+2)/(1.2)=$13.33Usingfinancialcalculator:16FV;20I/Y;1N;CPTPV=-13.338-4One-PeriodExample:UsingaTimeline012320%P1=14P0D1=$2Expecttosellstockatthisprice+PVIF20%,1$16expecta$2dividendin1yearandsellthestockfor$14Two-PeriodExampleNow,whatifyoudecidetoholdthestockfortwoyears?Inadditiontothedividendinoneyear,youexpectadividendof$2.10intwoyearsandastockpriceof$14.70attheendofyear2.Nowhowmuchwouldyoubewillingtopay?ComputethePVoftheexpectedcashflowsPrice=2/(1.2)+(2.10+14.70)/(1.2)2=13.33Usingfinancialcalculator:0CF0;2CF1;16.80CF2;20I/Y;CPTNPV=13.338-6Two-PeriodExample:UsingaTimeline012320%P2=$14.70P0D1=$2D2=$2.10$16.80+11.6671.667$13.33dividendof$2atyr1dividendof$2.10atyr2stockpriceof$14.70atyr2Three-PeriodExampleFinally,whatifyoudecidetoholdthestockforthreeyears?Inadditiontothedividendsattheendofyears1and2,youexpecttoreceiveadividendof$2.205attheendofyear3andthestockpriceisexpectedtobe$15.435.Nowhowmuchwouldyoubewillingtopay?ComputethePVoftheexpectedcashflowsPrice=2/(1.2)+2.10/(1.2)2+(2.205+15.435)/(1.2)3=13.33Usingfinancialcalculator:0CF0;2CF1;2.10CF2;17.635CF3;20I/Y;CPTNPV=13.338-8Three-PeriodExample:UsingaTimeline012320%P3=$15.435P0D1=$2D2=$2.10$17.64+D3=$2.2051.6671.45810.208$13.33dividendof$2atyr1dividendof$2.10atyr2dividendof$2.205atyr3stockpriceof$15.435atyr3DevelopingTheModelYoucouldcontinuetopushbacktheyearinwhichyouwillsellthestockYouwouldfindthatthepriceofthestockisreallyjustthepresentvalueofallexpectedfuturedividendsSo,howcanweestimateallfuturedividendpayments?8-10EstimatingDividends:SpecialCasesConstantdividendThefirmwillpayaconstantdividendforeverThisislikepreferredstockThepriceiscomputedusingtheperpetuityformulaConstantdividendgrowthThefirmwillincreasethedividendbyaconstantpercenteveryperiodThepriceiscomputedusingthegrowingperpetuitymodelSupernormalgrowthDividendgrowthisnotconsistentinitially,butsettlesdowntoconstantgrowtheventuallyThepriceiscomputedusingamultistagemodel8-11ZeroGrowthIfdividendsareexpectedatregularintervalsforever,thenthisisaperpetuityandthepresentvalueofexpectedfuturedividendscanbefoundusingtheperpetuityformulaP0=D/RSupposestockisexpectedtopaya$0.50dividendeveryquarterandtherequiredreturnis10%withquarterlycompounding.Whatistheprice?P0=.50/(0.1/4)=$208-12ConstantDividendGrowthModelDividendsareexpectedtogrowataconstantpercentperperiod.P0=D1/(1+R)+D2/(1+R)2+D3/(1+R)3+…P0=D0(1+g)/(1+R)+D0(1+g)2/(1+R)2+D0(1+g)3/(1+R)3+…Withalittlealgebraandsomeserieswork,thisreducesto:8-13ConstantDividendGrowthModel–Example1SupposeBigD,Inc.,justpaidadividendof$0.50pershare.Itisexpectedtoincreaseitsdividendby2%peryear.Ifthemarketrequiresareturnof15%onassetsofthisrisk,howmuchshouldthestockbesellingfor?8-14ConstantDividendGrowthModel–Example2SupposeTBPirates,Inc.,isexpectedtopaya$2dividendinoneyear.Ifthedividendisexpectedtogrowat5%peryearandtherequiredreturnis20%,whatistheprice?Whyisn’tthe$2inthenumeratormultipliedby(1.05)inthisexample?8-15StockPriceSensitivitytoDividendGrowthRate,gD1=$2;R=20%8-16StockPriceSensitivityto

RequiredReturn,RD1=$2;g=5%8-17GordonGrowthCompany-IGordonGrowthCompanyisexpectedtopayadividendof$4nextperiod,anddividendsareexpectedtogrowat6%peryear.Therequiredreturnis16%.Whatisthecurrentprice?Rememberthatwealreadyhavethedividendexpectednextyear,sowedon’tmultiplythedividendby1+g8-18GordonGrowthCompany-IIWhatisthepriceexpectedtobeinyear4?Whatistheimpliedreturngiventhechangeinpriceduringthefouryearperiod?Usingfinancialcalculator:-40PV;50.50FV;4N;CPTI/Y=6%Thepricegrowsatthesamerateasthedividends8-19ConstantDGM:PriceGrowsatSameRateasDividends8-20NonconstantGrowth

ProblemStatementSupposeafirmisexpectedtoincreasedividendsby20%foroneyearandthenby15%intheyearfollowing.Afterthat,dividendswillincreaseatarateof5%peryearindefinitely.Ifthedividendattime0,D0,was$1andtherequiredreturnis20%,whatisthepriceofthestock?RememberthatwehavetofindthePVofallexpectedfuturedividends.8-21NonconstantGrowth

ExampleSolutionComputethedividendsuntilgrowthlevelsoffD1=1(1.2)=$1.20D2=1.20(1.15)=$1.38D3=1.38(1.05)=$1.449FindtheexpectedfuturepriceP2=D3/(R–g)=1.449/(.2-.05)=9.66FindthepresentvalueoftheexpectedfuturecashflowsUsingfinancialcalculator:0CF0;1.2CF1;11.04CF2;20I/Y;1P/Y;CPTNPV=8.678-22QuickQuiz–PartIAcompanyhasjustpaidadividendof$2.Whatisthevalueofitsstockifitexpectstomaintainthislevelofdividendeveryyea.Assumethattherequiredreturnis15%.Whatifthecompanystartsincreasingdividendsby3%peryear,beginningwiththenextdividend?Therequiredreturnstaysat15%.8-23UsingtheConstantDGMtoFindRequiredReturn,DividendYield,CapitalGainsYieldStartwiththeConstantDGM:8-24FindingtheRequiredReturn,DividendYield,CapitalGainsYield-ExampleSupposeafirm’sstockissellingfor$10.50.Itjustpaida$1dividend,D0,anddividendsareexpectedtogrowat5%peryear.Whatistherequiredreturn?Whatisthedividendyield,D1/P0?Whatisthecapitalgainsyield?g=5%8-25Table8.1-StockValuationSummary8-26OtherStockValuationMethods:MarketMultipleMethodAlsoknownasthepeercomparisonmethod.Thevalueofacompanyisderivedbyapplyingacertainmultipliertothecompany’sprofitabilityparameter.Analystsoftenusethefollowingmultiplestovaluestocks.P/E(Price-to-earnings)ratioP/SalesExample:Basedoncomparablefirms,estimatetheappropriateP/E.Multiplythisbyexpectedearningstoobtainanestimateofthestockprice.ProblemswithMarket

MultipleMethodOftenhardtofindcomparablefirms.Theaverageratiofromasampleofcomparablefirmscanhaveawiderange.Example:TheaverageP/Eratioofcomparablefirmsis20buttherangeisfrom10to50.FeaturesofCommonStockVotingRightsProxyvotingClassesofstockOtherRightsShareproportionallyindeclareddividendsShareproportionallyinremainingassetsduringliquidationPreemptiveright–firstshotatnewstockissuetomaintainproportionalownershipifdesired8-29DividendCharacteristicsDividendsarenotaliabilityofthefirmuntiladividendhasbeendeclaredbytheBoardConsequently,afirmcannotgobankruptfornotdeclaringdividendsDividendsandTaxesDividendpaymentsarenotconsideredabusinessexpense;therefore,theyarenottaxdeductibleThetaxationofdividendsreceivedbyindividualsvariesacrosscountries8-30FeaturesofPreferredStockDividendsPreferreddividendmustbepaidbeforedividendscanbepaidtocommonstockholdersDividendsarenotaliabilityofthefirm.PreferreddividendscanbedeferredindefinitelyMostpreferreddividendsarecumulative–anymissedpreferreddividendshavetobepaidbeforecommondividendscanbepaidPreferredstockgenerallydonotcarryvotingrights8-31Ifpreferredstockwithanannualdividendof$5sellsfor$50,whatisthepreferredstock’sexpectedreturn?PreferredStock–ExampleStockMarketDealersvs.BrokersNewYorkStockExchange(NYSE)LargeststockmarketintheworldLicenseholders(1,366)CommissionbrokersSpecialistsFloorbrokersFloortradersOperationsFlooractivity8-33NASDAQNotaphysicalexchange–computer-basedquotationsystemMultiplemarketmakersElectronicCommunicationsNetworksThreelevelsofinformationLevel1–medianquotes,registeredrepresentativesLevel2–viewquotes,brokers&dealersLevel3–viewandupdatequotes,dealersonlyLargeportionoftechnologystocks8-34TheSingaporeExchangeVisit.sg

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