National Fuel is not only a gas public utility but also has exploration and production, and...

 

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National Fuel is not only a gas public utility but also has exploration and production, and pipeline operations through its various subsidiaries. The company operates in New York, Pennsylvania and California. Public utilities in electricity, natural gas, and water tend to be valid companies to apply a constant growth dividend model for stock valuation because they tend to be stable in their dividend policies and exhibit relatively slow growth. In fact, NFG has increased its annual dividend by $0.04 per share every year for 50 years now. Use Yahoo Finance or any other source to find NFG's current annual dividend per share and/or dividend yield (i.e. D/P). Make sure you express current dividends (i.e. DO) in annual dollars for the constant growth model. a. Based on NFG's historical dividend behavior and current annual dividend, estimate a forward- looking growth rate for dividends per share (i.e. g). b. If an analyst has estimated NFG's required return on equity (i.e. R) to be in the range of 6% to 7%, then estimate a fair range for the intrinsic value of NFG's stock. c. Compare your results to NFG's current trading price and briefly discuss whether you believe this valuation methodology is fairly reliable in this case National Fuel is not only a gas public utility but also has exploration and production, and pipeline operations through its various subsidiaries. The company operates in New York, Pennsylvania and California. Public utilities in electricity, natural gas, and water tend to be valid companies to apply a constant growth dividend model for stock valuation because they tend to be stable in their dividend policies and exhibit relatively slow growth. In fact, NFG has increased its annual dividend by $0.04 per share every year for 50 years now. Use Yahoo Finance or any other source to find NFG's current annual dividend per share and/or dividend yield (i.e. D/P). Make sure you express current dividends (i.e. DO) in annual dollars for the constant growth model. a. Based on NFG's historical dividend behavior and current annual dividend, estimate a forward- looking growth rate for dividends per share (i.e. g). b. If an analyst has estimated NFG's required return on equity (i.e. R) to be in the range of 6% to 7%, then estimate a fair range for the intrinsic value of NFG's stock. c. Compare your results to NFG's current trading price and briefly discuss whether you believe this valuation methodology is fairly reliable in this case

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a Based on NFGs historical dividend behavior and current annual dividend estimate a forward look... View the full answer