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Assume you want to evaluate the stock value of JB Hi - Fi Ltd . ( ASX: JBH . AX ) using the Dividend Discount
Assume you want to evaluate the stock value of JB HiFi LtdASX: JBHAX using the Dividend Discount Model. You will need to find information on dividends, the discount rate, and growth rates Assuming you have access to JB HiFi's information from the financial year to the financial year ieth June Below are several tasks for you to complete.
Q Find Dividends
Find the interim and final dividend per share DPS and the dividend payout ratio DPR of JB HiFi Ltd for the abovementioned period. List all the values.
In sentences, discuss any patterns you observe in the DPS or DPR and explain how you would use either or both metrics to perform the DDM analysis.
Q Find Growth rates
Find the earnings per share EPS in the company's financial statement and calculate the EPS growth rate. Briefly describe your method.
Calculate the sustainable growth rate and briefly describe your method.
Compare the EPS growth rate with the sustainable growth rate, and in sentences, discuss which one you would prefer for evaluating JB HiFi and why.
Q Find discount rate
In sentences, discuss how you would estimate the discount rate. How would you find the necessary information to complete this calculation?
Q Apply the DDM
Based on your findings from questions and your understanding of JB HiFi's financial performance, which DDM would you use for evaluating JB HiFi: a constant DDM constant growth DDM or a multistage DDM Justify your choice in sentences.
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