Professional Documents
Culture Documents
Valuation
10-1
10-2
Fundamental Analysis
10-3
Present Value Approach
10-4
Required Inputs
Discount rate
Required rate of return: minimum expected
rate to induce purchase
The opportunity cost of dollars used for
investment
Expected cash flows
Stream of dividends or other cash payouts
over the life of the investment
10-5
Required Inputs
10-6
Dividend Discount Model
D1 D2 D
Pcs 1
2
...
( 1 kcs ) ( 1 kcs ) ( 1 kcs )
Dt
t
t 1 ( 1 kcs )
10-7
Dividend Discount Model
Problems:
Need infinite stream of dividends
Dividend stream is uncertain
Must estimate future dividends
Dividends may be expected to grow over
time
Must model expected growth rate of dividends
and need not be constant
10-8
Dividend Discount Model
D0
P0
kcs
Similar to preferred stock because dividend
remains unchanged
10-9
Examples
10-10
Dividend Discount Model
10-11
Examples
10-12
Perubahan pada growth rate
10-13
Perubahan pada required return
10-14
Example: Estimating the Dividend Growth Rate
15
Advantages and Disadvantages of Dividend
Growth Model
16
Dividend Discount Model
10-17
Dividend Discount Model
t
n D0( 1 g1 ) Dn( 1 gc ) 1
P0 t
n
t 1 ( 1 k) k-g ( 1 k)
10-18
Dividend Discount Model
10-19
Example: Valuing equity with growth of
30% for 3 years, then a long-run
constant growth of 6%
0 k=16% 1 2 3 4
g = 30% g = 30% g = 30% g = 6%
D0 = 4.00 5.20 6.76 8.788 9.315
4.48
5.02
5.63
59.68 P3 = 9.315
74.81 = P0 .10
Contoh
10-21
What About Capital Gains?
10-22
Other Discounted Cash Flows
10-23
Intrinsic Value
10-24
P/E Ratio or Earnings Multiplier
Approach
Alternative approach often used by
security analysts
P/E ratio is the strength with which
investors value earnings as expressed
in stock price
Divide the current market price of the stock
by the latest 12-month earnings
Price paid for each $1 of earnings
10-25
P/E Ratio Approach
10-26
Contoh
10-27
Perubahan pada required return
10-28
P/E Ratio Approach
10-29
Understanding the P/E Ratio
Can firms increase payout ratio to increase
market price?
Will future growth prospects be affected?
Does rapid growth affect the riskiness of
earnings?
Will the required return be affected?
Are some growth factors more desirable than
others?
P/E ratios reflect expected growth and risk
10-30
P/E Ratios and Interest Rates
10-31
Which Approach Is Best?
10-32
Which Approach Is Best?
Complementary approaches?
P/E ratio can be derived from the constant-
growth version of the dividend discount
model
Dividends are paid out of earnings
Using both increases the likelihood of
obtaining reasonable results
Dealing with uncertain future is always
subject to error
10-33
Other Multiples
10-34