公司理財教材

1、Stock ValuationChapter 8Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin1Chapter OutlineBond and Stock DifferencesCommon Stock ValuationFeatures of Common StockFeatures of Preferred StockThe Stock Markets2Chapter OutlineBond and Stock DifferencesCommon Stock Va

2、luationFeatures of Common StockFeatures of Preferred StockThe Stock Markets3Bonds and Stocks: SimilaritiesBoth provide long-term funding for the organizationBoth are future funds that an investor must considerBoth have future periodic paymentsBoth can be purchased in a marketplace at a price “today”

3、4Bonds and Stocks: DifferencesFrom the firms perspective: a bond is a long-term debt and stock is equityFrom the firms perspective: a bond gets paid off at the maturity date; stock continues indefinitely.We will discuss the mix of bonds (debt) and stock (equity) in a future chapter entitled capital

4、structure5Bonds and Stocks: DifferencesA bond has coupon payments and a lump-sum payment; stock has dividend payments foreverCoupon payments are fixed; stock dividends change or “grow” over time6A visual representation of a bond with a coupon payment (C) and a maturity value (M)12345$C1$C2$C3$C4$C5$

5、M7A visual representation of a share of common stock with dividends (D) forever12345$D1$D2$D3$D4$D5$D8Comparison Valuations123BondCCCMP00123Common StockD1D2D3DP009Notice these differences:The “Cs” are constant and equalThe bond ends (year 5 here)There is a lump sum at the end12345$C1$C2$C3$C4$C5$M10

6、Notice these differences:The dividends are differentThe stock never endsThere is no lump sum12345$D1$D2$D3$D4$D5$D11Chapter OutlineBond and Stock DifferencesCommon Stock ValuationFeatures of Common StockFeatures of Preferred StockThe Stock Markets12Our Task:To value a share of Common Stock13And how

7、will we accomplish our task?14BAEFEIPVTBringAllExpectedFutureEarningsIntoPresentValueTerms15BAEFEIPVTJust remember:16Cash Flows for StockholdersIf you buy a share of stock, you can receive cash in two ways:The company pays dividends2. You sell your shares, either to another investor in the market or

8、 back to the company17One-Period ExampleReceiving one future dividend and one future selling price of a share of common stock18One-Period ExampleSuppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect it to pay a $2 dividend in one year, and you believe that you can sell the s

9、tock for $14 at that time. If you require a return of 20% on investments of this risk, what is the maximum you would be willing to pay?19Visually this would look like:1D1 = $2P1 = $14R = 20%20Compute the Present Value1D1 = $2P1 = $14R = 20%$1.67$11.67PV =$13.34211 year = N20% = Discount rate $2 = Pa

10、yment (PMT)$14 = FVPV = ?-13.341st2ndTI BA II Plus8-228-22$14 = FV1 year = N$2 = Payment (PMT)20% = Discount rate PV = ?-13.34HP 12-C23Two Period ExampleNow, what if you decide to hold the stock for two years? In addition to the dividend in one year, you expect a dividend of $2.10 in two years and a

11、 stock price of $14.70 at the end of year. Now how much would you be willing to pay?24Visually this would look like:2D1 = $2P2 = $14.70R = 20%1D2 = $ 2.1025Compute the Present Value2D1 = $2P2 = $14.70R = 20%1D2 = $ 2.10$1.67$1.46$ 10.21$ 13.34 = P026What is the Observed Pattern?We value a share of s

12、tock by bring back all expected future dividends into present value terms27Future DividendsSo the key is to determine the future dividends when given the growth rate of those dividends, whether the growth is zero, constant, or unusual first and then levels off to a constant growth rate. 28So how do

13、you compute the future dividends?Three scenarios:A constant dividend (zero growth)The dividends change by a constant growth rateWe have some unusual growth periods and then level off to a constant growth rate29So how do you compute the future dividends?Three scenarios:A constant dividend (zero growt

14、h)The dividends change by a constant growth rateWe have some unusual growth periods and then level off to a constant growth rate301. Constant Dividend Zero GrowthThe firm will pay a constant dividend foreverThis is like preferred stockThe price is computed using the perpetuity formula:P0 = D / R31So

15、 how do you compute the future dividends?Three scenarios:A constant dividend (zero growth)The dividends change by a constant growth rateWe have some unusual growth periods and then level off to a constant growth rate322. Constant Growth Rate of DividendsDividends are expected to grow at a constant p

16、ercent per period.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 + 332. Constant Growth Rate of DividendsWith a little algebra this reduces to:342. Constant Growth Rate of DividendsStudent caution:A. What happens if g R?B. What happens if g = R?35Di

17、vidend Growth Model (DGM) AssumptionsTo use the Dividend Growth Model (aka the Gordon Model), you must meet all three requirements:The growth of all future dividends must be constant,The growth rate must be smaller than the discount rate ( g R), andThe growth rate must not be equal to the discount r

18、ate (g R)36DGM Example 1Suppose Big D, Inc., just paid a dividend (D0) of $0.50 per share. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for?37DGM Example 1 SolutionP0 = .50 ( 1 + .02) .15 -

19、 .02P0 = .51 .13= $3.9238DGM Example 2Suppose Moore Oil Inc., is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price?39DGM Example 2 SolutionP0 = 2.00 .20 - .05P0 = 2.00 .15= $13.3440So how do you compute the

20、 future dividends?Three scenarios:A constant dividend (zero growth)The dividends change by a constant growth rateWe have some unusual growth periods and then level off to a constant growth rate413. Unusual Growth;Then Constant GrowthJust draw the time line with the unusual growth rates identified an

21、d determine if/when you can use the Dividend Growth Model. Deal with the unusual growth dividends separately.42Non-constant Growth Problem StatementSuppose a firm is expected to increase dividends by 20% in one year and by 15% for two years. After that, dividends will increase at a rate of 5% per ye

22、ar indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of the stock?43Non-constant Growth Problem StatementDraw the time line and compute each dividend using the corresponding growth rate:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D344Non-constant Growth Pr

23、oblem StatementDraw the time line and compute each dividend using the corresponding growth rate:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3D1 = ($1.00) (1 + 20%) = $1.00 x 1.20 = $1.20=1.2045Non-constant Growth Problem StatementDraw the time line and compute each dividend using the correspondin

24、g growth rate:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3D2 = ($1.20) (1 + 15%) = $1.20 x 1.15 = $1.38=1.3846Non-constant Growth Problem StatementDraw the time line and compute each dividend using the corresponding growth rate:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3D3 = ($1.38) (1 + 15

25、%) = $1.38 x 1.15 = $1.59=1.5947Non-constant Growth Problem StatementNow we can use the DGM starting with the period of the constant growth rate at our time frame of year 3:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3P3 = D4/R g P3 = D3 (1 + g) / R - gR = 20%48Non-constant Growth Problem Stateme

26、ntNow we can use the DGM starting with the period of the constant growth rate at our time frame of year 3:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3 P3 = D3 (1 + g) / R - gP3 = 1.59 (1.05)/ .20 - .05 = $11.13R = 20%49Non-constant Growth Problem StatementWe now have all of the dividends account

27、ed for and we can compute the present value for a share of common stock:g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3R = 20%1.20 1.38 1.59P3 = 11.1350Non-constant Growth Problem StatementBAEFEIPVT!g = 20%g = 15%g = 15%g = 5% D0 = $1.001234D1D2D3R = 20%1.20 1.38 1.59P3 = 11.13$9.3251Stock Price Se

28、nsitivity to Dividend Growth, gD1 = $2; R = 20%05010015020025000.050.10.150.2Growth RateStock Price52Stock Price Sensitivity to Required Return, RD1 = $2; g = 5%05010015020025000.050.10.150.20.250.3Growth RateStock Price53Using the DGM to Find RStart with the DGM and then algebraically rearrange the

29、 equation to solve for R:54Finding the Required Return - ExampleSuppose a firms stock is selling for $10.50. It just paid a $1 dividend, and dividends are expected to grow at 5% per year. What is the required return? R = 1(1.05)/10.50 + .05 = 15%What is the dividend yield?1(1.05) / 10.50 = 10%What i

30、s the capital gains yield?g =5%55Stock Valuation AlternativeBut my company doesnt pay dividends! How can I value the stock?56Valuation Using MultiplesWe can use the PE ratio and/or the price-sales ratio:Pt = Benchmark PE ratio X EPStPt = Benchmark price-sales ratio X Sales per sharet57Stock Valuatio

31、n Summary58Chapter OutlineBond and Stock DifferencesCommon Stock ValuationFeatures of Common StockFeatures of Preferred StockThe Stock Markets59Features of Common StockVoting RightsProxy votingClasses of stock60Features of Common StockOther RightsShare proportionally in declared dividendsShare propo

32、rtionally in remaining assets during liquidationPreemptive right first shot at new stock issue to maintain proportional ownership if desired61Dividend CharacteristicsDividends are not a liability of the firm until a dividend has been declared by the BoardConsequently, a firm cannot go bankrupt for n

33、ot declaring dividends62Dividend CharacteristicsDividends and TaxesDividend payments are not considered a business expense; therefore, they are not tax deductibleThe taxation of dividends received by individuals depends on the holding periodDividends received by corporations have a minimum 70% exclu

34、sion from taxable income63Chapter OutlineBond and Stock DifferencesCommon Stock ValuationFeatures of Common StockFeatures of Preferred StockThe Stock Markets64Features of Preferred StockDividendsStated dividend that must be paid before dividends can be paid to common stockholdersDividends are not a

35、liability of the firm, and preferred dividends can be deferred indefinitely65Features of Preferred StockDividendsMost preferred dividends are cumulative any missed preferred dividends have to be paid before common dividends can be paid66Features of Preferred StockPreferred stock generally does not c

36、arry voting rights67Chapter OutlineBond and Stock DifferencesCommon Stock ValuationFeatures of Common StockFeatures of Preferred StockThe Stock Markets68Stock Market, Dealers vs. BrokersDealer: trades with inventory for bid and ask pricesBroker: matches buyers and sellers for a fee69Stock MarketNew

37、York Stock Exchange (NYSE)Largest stock market in the worldLicense holders (1,366)Commission brokersSpecialistsFloor brokersFloor tradersOperationsFloor activity70NASDAQNot a physical exchange it is a computer-based quotation systemMultiple market makersElectronic Communications Networks71NASDAQThre

38、e levels of information:Level 1 median quotes, registered representativesLevel 2 view quotes, brokers & dealersLevel 3 view and update quotes, dealers onlyA large portion of technology stocks are bought and sold each day on NASDAQ72Work the WebElectronic Communications Networks provide trading in NA

39、SDAQ securitiesClick on the web surfer and visit Instinet73Reading Stock Quotes74Work the WebClick on the web surfer to go to Bloomberg for current stock quotes.75Ethics IssuesThe status of pension funding (i.e., over- vs. under-funded) depends heavily on the choice of a discount rate. When actuarie

40、s are choosing the appropriate rate, should they give greater priority to future pension recipients, management, or shareholders?How has the increasing availability and use of the internet impacted the ability of stock traders to act unethically?76Quick QuizWhat is the value of a stock that is expected to pay a constant dividend of $2 per year if the required return is 15%?What if the company starts increasing dividends by 3% per year, beginning with the next dividend? The required return stays at 15%.77Comprehensive ProblemXYZ stock currently sells for $50 per