Essay Value Walmart - 909 Words

Valuing Walmart Author: Austin Bogus Jarrod Fenstermacher Remi Omisore For Review: Professor Gurdip S. Bakshi â€Å"We, the aforementioned team, pledge on our honor that we have not given or received any unauthorized assistance on this assignment.† - University of Maryland Honor Pledge September 24, 2012 Case Three 3.1 Question One As of February 2010, what is your assessment of the worth of Walmarts stock? Utilize all of the methods discussed in the case to value the shares, including the following: †¢ The perpetual growth in dividends †¢ Forecasted dividends for the next several years plus sale of the stock in the future †¢ The three-stage dividend model †¢ The price/earnings approach 3.1.1 The perpetual growth in†¦show more content†¦Dividends were assumed to grow at the geometric average of the last 6 years, 20.28%. P0 = D2 Dn Pn D1 + +  ·Ã‚ ·Ã‚ · + + 1 2 n (1 + Ke ) (1 + Ke ) (1 + Ke ) (1 + Ke )n $1.58 $2.28 $87.31 $1.31 + +  ·Ã‚ ·Ã‚ · + + = 1 2 4 (1 + 7.0%) (1 + 7.0%) (1 + 7.0%) (1 + 7.0%)4 = $72.53 (3.2) 3.1.3 The three-stage dividend model Some applications of dividend discount modeling can be more complex. One method divides the future growth in dividends into three periods, all of which have diï ¬â‚¬erent growth rates. This is useful when a company’s proï ¬ ts are expected to grow rapidly and then gradually decline to an industry average. The complexities of this model are outside of the scope of this report, and the model can easily be run using tools found online. The assumptions of this calculation as follows. Walmart is no longer in a growth phase, so this calculation assumes that it is at the transitional phase. Because of this, 2007 data is used to initialize the calculation (EPS, dividend, etc.,) and the ‘growth’ period was 3 years. Initial growth of EPS still assumed to be 10.4%. 14 transitional years, as required by the model (total of 17 years for growth and transition is required). All of these assumptions result in a 3 stage DDMShow MoreRelatedThe Value Chain Of Walmart1287 Words   |  6 PagesWalmart, founded by Sam Walton in 1962 in Bentonville, Arkansas, United States, is a well-known multinational retail company which manages a chain of department stores and warehouse stores. It has over 11,000 stores in 28 countries and is the largest company in the world in terms of revenue. The definition of the value chain Walmart is a successful chain retailer. While it successfully won its market share, the company also reflected its value chain. What is the value chain? According to Porter’sRead MoreWalmart : Market And Social Values1599 Words   |  7 PagesWalmart has always been a controversial topic centering its economic and social values since the day it started to expand. 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