CH09StocksandTheirValuation(财务管理,英文版)课件.pptx

9-1Copyright 2001 by Harcourt,Inc.All rights reserved.CHAPTER 9Stocks and Their ValuationnFeatures of common stocknDetermining common stock valuesnEfficient marketsnPreferred stock9-2Copyright 2001 by Harcourt,Inc.All rights reserved.nRepresents ownership.nOwnership implies control.nStockholders elect directors.nDirectors elect management.nManagements goal:Maximize stock price.Facts about Common Stock9-3Copyright 2001 by Harcourt,Inc.All rights reserved.Social/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 competition.9-4Copyright 2001 by Harcourt,Inc.All rights reserved.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?9-5Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-6Copyright 2001 by Harcourt,Inc.All rights reserved.Average Initial Returns on IPOs in Various CountriesMalaysia100%75%50%25%BrazilPortugalJapanSwedenUnited StatesCanada9-7Copyright 2001 by Harcourt,Inc.All rights reserved.nDividend growth modelnFree cash flow methodnUsing the multiples of comparable firmsDifferent Approaches for Valuing Common Stock9-8Copyright 2001 by Harcourt,Inc.All rights reserved.One whose dividends are expected togrow forever at a constant rate,g.Stock Value=PV of DividendsWhat is a constant growth stock?9-9Copyright 2001 by Harcourt,Inc.All rights reserved.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-g9-10Copyright 2001 by Harcourt,Inc.All rights reserved.$0.25Years(t)09-11Copyright 2001 by Harcourt,Inc.All rights reserved.What happens if g ks?nIf ks g and(2)g is expected to be constant forever.9-12Copyright 2001 by Harcourt,Inc.All rights reserved.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:9-13Copyright 2001 by Harcourt,Inc.All rights reserved.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%2.129-14Copyright 2001 by Harcourt,Inc.All rights reserved.=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$30.29.9-15Copyright 2001 by Harcourt,Inc.All rights reserved.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)=$32.10.9-16Copyright 2001 by Harcourt,Inc.All rights reserved.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$30.29=6.0%.9-17Copyright 2001 by Harcourt,Inc.All rights reserved.Rearrange model to rate of return form:$.PDkgDPgs0110=-=+to ksThen,ks=$2.12/$30.29+0.06=0.07+0.06=13%.9-18Copyright 2001 by Harcourt,Inc.All rights reserved.P0=$15.38.What would P0 be if g=0?The dividend stream would be a perpetuity.2.002.002.00012313%.PMTk$2.000.139-19Copyright 2001 by Harcourt,Inc.All rights reserved.nCan no longer use constant growth model.nHowever,growth becomes constant after 3 years.If we have supernormal growth of 30%for 3 years,then a long-run constant g=6%,what is P0?k is still 13%.9-20Copyright 2001 by Harcourt,Inc.All rights reserved.Nonconstant growth followed by constantgrowth:02.3012.6473.04546.1161234ks=13%54.109 =P0g=30%g=30%g=30%g=6%D0=2.00 2.600 3.380 4.394 4.658$.$66.54P34.658130 06=-=0.9-21Copyright 2001 by Harcourt,Inc.All rights reserved.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$54.119-22Copyright 2001 by Harcourt,Inc.All rights reserved.nDuring nonconstant growth,D/P and capital gains yield are not constant,and capital gains yield is less than g.nAfter t=3,g=constant=6%=capital gains yield;k=13%;so D/P=13%6%=7%.9-23Copyright 2001 by Harcourt,Inc.All rights reserved.25.72Suppose g=0 for t=1 to 3,and then g is a constant 6%.What is P0?01.771.571.3920.991234ks=13%g=0%g=0%g=0%g=6%2.00 2.00 2.00 2.00 2.12.$P32.1200730.29.=.9-24Copyright 2001 by Harcourt,Inc.All rights reserved.t=3:Now have constant growth with g=capital gains yield=6%and D/P=7%.$2.00$25.72What is D/P and capital gains yield at t=0 and at t=3?t=0:D1P0=7.78%.CGY=13%7.78%=5.22%.9-25Copyright 2001 by Harcourt,Inc.All rights reserved.If g=-6%,would anyone buy the stock?If so,at what price?Firm still has earnings and still paysdividends,so P0 0:()$PDkgD gkgss0101=-=+-$2.00(0.94)$1.880.13 (-0.06)0.19=$9.89.9-26Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-27Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-28Copyright 2001 by Harcourt,Inc.All rights reserved.nOnce the value of the firm is estimated,an estimate of the stock price can be found as follows:lMV of common stock(market capitalization)=MV of firm MV of debt and preferred stock.lP=MV of common stock/#of shares.Using the Free Cash Flow Method9-29Copyright 2001 by Harcourt,Inc.All rights reserved.nFree cash flow method is often preferred to the dividend growth model-particularly for the large number of companies that dont pay a dividend,or for whom it is hard to forecast dividends.Issues Regarding the Free Cash Flow Method(More.)9-30Copyright 2001 by Harcourt,Inc.All rights reserved.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 become constant.nTerminal value represents the value of the firm at the point in which growth becomes constant.FCF Method Issues Continued9-31Copyright 2001 by Harcourt,Inc.All rights reserved.416.942FCF 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=*TV39-32Copyright 2001 by Harcourt,Inc.All rights reserved.If 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 =$37.69.9-33Copyright 2001 by Harcourt,Inc.All rights reserved.nAnalysts often use the following multiples to value stocks:lP/ElP/CFlP/SaleslP/CustomernExample:Based on comparable firms,estimate the appropriate P/E.Multiply this by expected earnings to back out an estimate of the stock price.Using the Multiples of Comparable Firms to Estimate Stock Price9-34Copyright 2001 by Harcourt,Inc.All rights reserved.In 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.9-35Copyright 2001 by Harcourt,Inc.All rights reserved.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 common stock valuation approaches).Required returns are obtained from the CAPM.9-36Copyright 2001 by Harcourt,Inc.All rights reserved.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.D1P09-37Copyright 2001 by Harcourt,Inc.All rights reserved.Why 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 g9-38Copyright 2001 by Harcourt,Inc.All rights reserved.Whats 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.9-39Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-40Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-41Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-42Copyright 2001 by Harcourt,Inc.All rights reserved.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.9-43Copyright 2001 by Harcourt,Inc.All rights reserved.Preferred StocknHybrid security.nSimilar to bonds in that preferred stockholders receive a fixed dividend that must be paid before dividends can be paid on common stock.nHowever,unlike interest payments on bonds,companies can omit dividend payments on preferred stock without fear of pushing the firm into bankruptcy.9-44Copyright 2001 by Harcourt,Inc.All rights reserved.Whats the expected return of preferred stock with Vp=$50 and annual dividend=$5?1、有时候读书是一种巧妙地避开思考的方法。3月-233月-23Tuesday,March 28,20232、阅读一切好书如同和过去最杰出的人谈话。16:52:1216:52:1216:523/28/2023 4:52:12 PM3、越是没有本领的就越加自命不凡。3月-2316:52:1216:52Mar-2328-Mar-234、越是无能的人，越喜欢挑剔别人的错儿。16:52:1216:52:1216:52Tuesday,March 28,20235、知人者智，自知者明。胜人者有力，自胜者强。3月-233月-2316:52:1216:52:12March 28,20236、意志坚强的人能把世界放在手中像泥块一样任意揉捏。28 三月 20234:52:12 下午16:52:123月-237、最具挑战性的挑战莫过于提升自我。三月 234:52 下午3月-2316:52March 28,20238、业余生活要有意义，不要越轨。2023/3/28 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