Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
ToanalyzeToyotaina freecashflowtoequitymodel,we summarizeourinputs forhigh growthand stablegrowthin the following table: High Gr ...
High GrowthStable Growth Return on capital 20.49% 6.57% Reinvestment rate34.14% 51.93% Expected growth 7.00% 3.41% Beta 0.93 1.0 ...
threedistinctscenarios.Inthefirst,thefirmwillmaintainits high growth rate for a periodof time and thenbecome a stable-growthfirm ...
capitaldeclinedtomoresustainablelevels(say 12 percent) andthebetamovedtoward1.Bythesametoken,youcan haveanextraordinarygrowthper ...
analysisisalmostneverdone, withanalystssettling foran expectedvalueforeachvariable(revenuegrowth,operating margin, tax rate, etc ...
Scenario Analysis Inscenarioanalysis,weestimatecashflowsunderdifferent scenarios,rangingfromoptimistictopessimistic,andreport th ...
4.Reportingtheoutput.Thevalueofabusinessorassetwill varyacrossscenariosandtherearetwochoiceswhenitcomes topresentingtheoutputfro ...
reflecttheunderlyinguncertaintywefacein estimatingthe inputs to the valuation. There have generally been two impediments to good ...
likelihoodthatthevaluewillbelower.Forinstance,astock withanexpectedvalueof$40isagoodbuyifthestockprice is$30,evenifthereisa 40 p ...
3 I.M.D.Little,HiggledyPiggledyGrowth(Oxford,UK: Institute of Statistics, 1960). 4 T. Chrichfield, T. Dyckman, and J. Lakonishok ...
pretax operating margin of 16.50 percent. The weighted average for the sector was roughly 20 percent. 11 The margin each year is ...
CHAPTER 5 Equity Discounted Cash Flow Models In the three preceding chapters, we considered the basic principlesgoverningtheesti ...
Underlying Principle Wheninvestorsbuystockinpubliclytradedcompanies,they generallyexpect togettwo typesof cash flows:dividends d ...
causedbyexpectedchangesin interest ratesorrisk across time. Variations on the Dividend Discount Model Sinceprojectionsofdollardi ...
mindwhenestimatinga stablegrowthrate.First,sincethe growthrateinthefirm’sdividendsisexpectedtolastforever, thefirm’sotheroperati ...
thoughthecaponthegrowthratemaybethenominalgrowth rate ofthe economy,analysts mayuse growth ratesmuch lower than this value for i ...
Insummary,theGordongrowthmodelisbestsuitedforfirms growingataratecomparabletoorlowerthanthegrowthrate in the economy and that ha ...
The value of equity per share can then be computed: Thestockwastradingat$38inearlyNovemberof2005,very close to our estimated val ...
Pn= Price (terminal value) at the end of year gn= Steady state growth rate forever after yearn In the case where the extraordina ...
Thus,a firmwitha 5 percent growthrateand a returnon equityof 15 percentwillhaveastableperiodpayoutratioof 66.67 percent. The oth ...
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