1 The analyst following Hugo Boss estimates a target price of €77 per share. Under the assumption that the company’s profit margins, asset turnover, and capital structure remain constant after 2020, what is the terminal growth rate that is implicit in the analysts’ forecasts and target price?

2 Using the analyst’s forecasts, estimate Hugo Boss’s equity value under the following three scenarios:

a Hugo Boss enters into a competitive equilibrium in 2021.

b After 2020 Hugo Boss’s competitive advantage can be maintained only on the nominal revenue level achieved in 2020.

c After 2020 Hugo Boss’s competitive advantage can be maintained on a revenue base that remains constant in real terms.

3 Using the analyst’s forecasts, estimate Hugo Boss’s equity value under the assumption that the company’s profitability gradually reverts to its required level (i.e., APt = 0.75 × APt−1) after the terminal year.

4 Using the analyst’s forecasts, estimate the value of Adidas’s net operating assets using the discounted cash flow and the abnormal profit models under the assumption that free cash flows and abnormal NOPATs grow at 3 percent annually after 2020.
5 Why is the value estimate obtained from the DCF model different from the value estimate obtained from the abnormal NOPAT model?