[精选]CH09StocksandTheirValuation(财务管理,英文版).pptx

CHAPTER 9Stocks and Their ValuationnFeatures of mon stocknDetermining mon stock valuesnEfficient marketsnPreferred stocknRepresents ownership.nOwnership implies control.nStockholders elect directors.nDirectors elect management.nManagements goal:Maximize stock price.Facts about mon StockSocial/Ethical QuestionShould management be equally concerned about employees,customers,suppliers,“the public,or just the stockholders?In enterprise economy,work for stockholders subject to constraints environmental,fair hiring,etc.and petition.nClassified stock has special provisions.nCould classify existing stock as founders shares,with voting rights but dividend restrictions.nNew shares might be called“Class A shares,with voting restrictions but full dividend rights.Whats classified stock?How might classified stock be used?When is a stock sale an initial public offering IPO?A firm“goes public through an IPO when the stock is first offered to the public.Average Initial Returns on IPOs in Various CountriesMalaysia100%75%50%25%BrazilPortugalJapanSwedenUnited StatesCanadanDividend growth modelnFree cash flow methodnUsing the multiples of parable firmsDifferent Approaches for Valuing mon StockOne whose dividends are expected togrow forever at a constant rate,g.Stock Value=PV of DividendsWhat is a constant growth stock?For a Constant Growth StockD1=D0 1+g 1D2=D0 1+g 2Dt=Dt 1+g tP0=.If g is constant,then:D0 1+g ks-gD1ks-g$0.25Years t 0What happens if g ks?nIf ks g and 2 g is expected to be constant forever.Assume beta=1.2,kRF=7%,and kM=12%.What is the required rate of return on the firms stock?ks=kRF+kM kRF bFirm =7%+12%7%1.2 =13%.Use the SML to calculate ks:D0 was$2.00 and g is a constant 6%.Find the expected dividends for the next 3 years,and their PVs.ks=13%.012.24722.3823g=6%1.87611.7599D0=2.001.650913%2.12=Whats the stocks market value?D0=2.00,ks=13%,g=6%.Constant growth model:P0=D1ks g 0.13 0.06$2.12$2.120.07$30.29.nD1 will have been paid,so expected dividends are D2,D3,D4 and so on.Thus,Could also find P1 as follows:ks g 0.13 0.06 P1=What is the stocks market value one year from now,P1?D2$2.247=$32.10.P1=P0 1.06 =$32.10.Find the expected dividend yield,capital gains yield,and total return during the first year.Dividend yld =Cap gains yld=Total return=7.0%+6.0%=13.0%.D1P0P1 P0P0$30.29$2.12 7.0%.$32.10$30.29$30.29=6.0%.Rearrange model to rate of return form:$.PDkgDPgs0110=-=+to ksThen,ks=$2.12/$30.29+0.06=0.07+0.06=13%.P0=$15.38.What would P0 be if g=0?The dividend stream would be a perpetuity.2.002.002.00012313%.PMTk$2.000.13nCan no longer use constant growth model.nHowever,growth be es constant after 3 years.If we have supernormal growth of 30%for 3 years,then a long-run constant g=6%,what is P0?k is still 13%.Nonconstant growth followed by constantgrowth:02.3012.6473.04546.1161234ks=13%54.109 =P0g=30%g=30%g=30%g=6%D0=2.00 2.600 3.380 4.394 4.658$.$66.54P34.658130 06=-=0.What is the expected dividend yield and capital gains yield at t=0?At t=4?Div.yield0=4.81%.Cap.gain0=13.00%4.81%=8.19%.$2.60$54.11nDuring nonconstant growth,D/P and capital gains yield are not constant,and capital gains yield is less than g.nAfter t=3,g=constant=6%=capital gains yield;k=13%;so D/P=13%6%=7%.25.72Suppose g=0 for t=1 to 3,and then g is a constant 6%.What is P0?01.771.571.3920.991234ks=13%g=0%g=0%g=0%g=6%2.00 2.00 2.00 2.00 2.12.$P32.1200730.29.=.t=3:Now have constant growth with g=capital gains yield=6%and D/P=7%.$2.00$25.72What is D/P and capital gains yield at t=0 and at t=3?t=0:D1P0=7.78%.CGY=13%7.78%=5.22%.If g=-6%,would anyone buy the stock?If so,at what price?Firm still has earnings and still paysdividends,so P0 0:$PDkgD gkgss0101=-=+-$2.00 0.94$1.880.13 -0.06 0.19=$9.89.What is the annual D/P and capital gains yield?Capital gains yield=g=-6.0%,Dividend yield=13.0%-6.0%=19%.D/P and cap.gains yield are constant,with high dividend yield 19%offsettingnegative capital gains yield.Free Cash Flow MethodnThe free cash flow method suggests that the value of the entire firm equals the present value of the firms free cash flows calculated on an after-tax basis.nRecall that the free cash flow in any given year can be calculated as:NOPAT Net capital investment.nOnce the value of the firm is estimated,an estimate of the stock price can be found as follows:lMV of mon stock market capitalization =MV of firm MV of debt and preferred stock.lP=MV of mon stock/#of shares.Using the Free Cash Flow MethodnFree cash flow method is often preferred to the dividend growth model-particularly for the large number of panies that dont pay a dividend,or for whom it is hard to forecast dividends.Issues Regarding the Free Cash Flow Method More.nSimilar to the dividend growth model,the free cash flow method generally assumes that at some point in time,the growth rate in free cash flow will be e constant.nTerminal value represents the value of the firm at the point in which growth be es constant.FCF Method Issues Continued416.942FCF estimates for the next 3 years are-$5,$10,and$20 million,after which the FCF is expected to grow at 6%.The overall firm cost of capital is 10%.0-4.5458.26415.026398.1971234k=10%g=6%-5 10 2021.2021.200.04.*TV3 represents the terminal value of the firm,at t=3.530=*TV3If the firm has$40 million in debt and has 10 million shares of stock,what is the price per share?Value of equity=Total value Value of debt =$416.94$40 =$376.94 million.Price per share=Value of equity/#of shares =$376.94/10 =$37.69.nAnalysts often use the following multiples to value stocks:lP/ElP/CFlP/SaleslP/CustomernExample:Based on parable firms,estimate the appropriate P/E.Multiply this by expected earnings to back out an estimate of the stock price.Using the Multiples of parable Firms to Estimate Stock PriceIn equilibrium,stock prices are stable.There is no general tendency for people to buy versus to sell.In equilibrium,expected returns mustequal required returns:What is market equilibrium?ks=D1/P0+g=ks=kRF+kM kRF b.ks=D1/P0+g=ks=kRF+kM kRF b.Expected returns are obtained by estimating dividends and expected capital gains which can be found using any of the three mon stock valuation approaches.Required returns are obtained from the CAPM.How is equilibrium established?If ks=+g ks,then P0 is“too low a bargain.Buy orders sell orders;P0 bid up;D1/P0 falls untilD1/P0+g=ks=ks.D1P0Why do stock prices change?1.ki could change:ki=kRF+kM kRF bi.kRF=k*+IP.2.g could change due to economic or firm situation.P0=D1ki gWhats the Efficient Market Hypothesis?EMH:Securities are normally in equilibrium and are“fairly priced.One cannot“beat the market except through good luck or better information.1.Weak-form EMH:Cant profit by looking at past trends.A recent decline is no reason to think stocks will go up or down in the future.Evidence supports weak-form EMH,but“technical analysis is still used.2.Semistrong-form EMH:All publicly available information is reflected in stock prices,so doesnt pay to pore over annual reports looking for undervalued stocks.Largely true,but superior analysts can still profit by finding and using new information.3.Strong-form EMH:All information,even inside information,is embedded in stock prices.Not true-insiders can gain by trading on the basis of insider information,but thats illegal.Markets are generally efficient because:1.15,000 or so trained analysts;MBAs,CFAs,Technical PhDs.2.Work for firms like Merrill,Morgan,Prudential,which have a lot of money.3.Have similar access to data.4.Thus,news is reflected in P0 almost instantaneously.Preferred StocknHybrid security.nSimilar to bonds in that preferred stockholders receive a fixed dividend that must be paid before dividends can be paid on mon stock.nHowever,unlike interest payments on bonds,panies can omit dividend payments on preferred stock without fear of pushing the firm into bankruptcy.Whats the expected return of preferred stock with Vp=$50 and annual 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1,2023n13、不知香、不知香积寺，数里入云峰。寺，数里入云峰。6月月-236月月-2303:38:0103:38:01June 1,2023n14、意志、意志坚强的人能把世界放在手中像泥的人能把世界放在手中像泥块一一样任意揉捏。任意揉捏。01 六月六月 20233:38:01 上午上午03:38:016月月-23n15、楚塞三湘接，、楚塞三湘接，荆门九派通。九派通。六月六月 233:38 上午上午6月月-2303:38June 1,2023n16、少年十五二十、少年十五二十时，步行，步行夺得胡得胡马骑。2023/6/1 3:38:0103:38:0101 June 2023n17、空山新雨后，天气晚来秋。、空山新雨后，天气晚来秋。3:38:01 上午上午3:38 上午上午03:38:016月月-23n9、杨柳散和柳散和风，青山澹吾，青山澹吾虑。6月月-236月月-23Thursday,June 1,2023n10、阅读一切好一切好书如同和如同和过去最杰出的人去最杰出的人谈话。03:38:0103:38:0103:386/1/2023 3:38:01 AMn11、越是没有本、越是没有本领的就越加自命非凡。的就越加自命非凡。6月月-2303:38:0103:38Jun-2301-Jun-23n12、越是无能的人，越喜、越是无能的人，越喜欢挑剔挑剔别人的人的错儿。儿。03:38:0103:38:0103:38Thursday,June 1,2023n13、知人者智，自知者明。、知人者智，自知者明。胜人者有力，自人者有力，自胜者者强。6月月-236月月-2303:38:0103:38:01June 1,2023n14、意志、意志坚强的人能把世界放在手中像泥的人能把世界放在手中像泥块一一样任意揉捏。任意揉捏。01 六月六月 20233:38:01 上午上午03:38:016月月-23n15、最具挑、最具挑战性的挑性的挑战莫莫过于提升自我。于提升自我。六月六月 233:38 上午上午6月月-2303:38June 1,2023n16、业余生活要有意余生活要有意义，不要越，不要越轨。2023/6/1 3:38:0103:38:0101 June 2023n17、一个人即使已登上、一个人即使已登上顶峰，也仍要自峰，也仍要自强不息。不息。3:38:01 上午上午3:38 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