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Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA)
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT Forecast Horizon Period Reported Terminal 2018 2019 2020 2021 2022 Period $100,629 $107,673 $115,210 $123,274 $131,904 $134,542 11,228 12,059 12,904 13,807 14,773 15,069 23,758 25,419 27,198 29,102 31,139 31,761 NOA Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $25,504 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 0 b. Home Depot stock closed at $176.76 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price
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