Home Depot (HD) Homework Financial Modeling - Stock Valuation

Determine the intrinsic value per share for Home Depot at the end of the fiscal year using a two-stage model (use the following information to construct the model):

1. Assume D₀ is current annual dividend per share listed in Bloomberg.

2. Assume that in first stage (lasting 5 years), HDs dividend per share grows by the Next 5 years growth estimate . (Be prepared to justify how would you choose this growth rate.....)
3. Assume that HDs dividend per share is expected to grow by x% per year = Mean Growth rate forever AFTER the five-year first stage growth is completed.
4. Calculate HDs cost of equity and compare it to the cost of equity from Bloomberg.

Show formulas, calculations and interpretation. Have a nice table with your assumptions (CAGR using historical growth rates, independent analysts' estimates, management guidance, most recent growth rate etc- like we did in class). Submit it in electronic format as well as in a hard copy attaching screenshots from Bloomberg screens where you got the data from.

1. How accurately does the model above value a share of HD stock?
2. What was the closing price at the end of the trade day on March 20 , 2019?
3. What was the closing price at the end of the fiscal year? Attach a chart with daily stock price performance for the past 12 months.
4. What are the possible problems with the model?
5. Did you encounter any difficulties or challenges?

Using also Bloombergs DDM Model, determine the value of HD stock as of the day mentioned above. Understand Bloomberg's DDM model by clicking on the Help function and Explain in a short paragraph the Bloomberg DDM model (inputs, formula, interpretation) and their result. Do you trust their result? Why? Why not?