Pick one of the three companies below and use the template of Microsoft given to perform the following analysis on the stock of your selected company. (You can use my template as reference and update with the information of your selected stock, or you can create your own.)

• Delta Air Lines Inc (ticker DAL)
• Starbucks Corp (ticker SBUX)
• The Walt Disney Co (ticker DIS)

Q1: obtain the past dividend distributions information and the systematic risk factor beta to estimate the discount rate (both type of information can be obtained from either Finance Yahoo! or MorningStar) Then use the Dividend Discount Model (DMM) to estimate the fundamental stock price with the following four assumptions, respectively:

1. Assuming that future annual dividends will remain the same as the current dividend.
2. Assuming that each year future annual dividends will grow at a rate consistent with the companys earnings growth rate from financial analysis.
3. Assuming that each year future annual dividends will grow at an average rate of past dividend growth rates.
4. Assuming that, each year of the next five years, dividends will grow at a non-constant rate and then achieve stable annual growth after 5 years.

Compare the DDM estimated stock price under each assumption to the actual stock price on the market. Explain the difference between your projected stock price and the actual stock price under each assumption if there is any.

Q2: estimate the stock price using Residual Income Model (RIM) with the information of past annual earnings per share (EPS) of book value per share (BPS) of your stock.

Compare the RIM estimated stock price to the actual stock price on the market. Explain the difference between the two stock prices if there is any.

Q3: obtain historical earnings per share (EPS), price/earnings ratio (P/E), price/book value ratio (P/B), book value per share (BPS), price/sales ratio (P/B), price/cash flows (P/CF) and other key financial information from MorningStar. Estimate stock price and explain price differences with actual trading price by using price ratio analysis on

1. price/earnings ratio (P/E)
2. price/book value ratio (P/B)
3. price/sales ratio (P/S)
4. price/cash flows (P/CF)

Financial Highlights Trading Information Fiscal Year Fiscal Year Ends Stock Price History Beta (5Y Monthly) Sep 29, 2019 0.80 Most Recent Quarter (mra) Mar 29, 2020 52-Week Change -7.19% S&P500 52-Week Change 3 5.10% Profitability Profit Margin 3 52 Week High 99.72 12.71% 52 Week Low 3 Operating Margin (ttm) 13.72% 50.02 50-Day Moving Average 3 76.96 Management Effectiveness Return on Assets (ttm) 200-Day Moving Average ? 79.72 10.13% Return on Equity (ttm) N/A Share Statistics Return on Equity (ttm) N/A Share Statistics Avg Vol (3 month)? 14.23M Income Statement Revenue (ttm) 16.25M 26.66B Avg Vol (10 day) 3 5 Shares Outstanding 1.17B Revenue Per Share (ttm) 22.42 Float 1.13B Quarterly Revenue Growth (yoy) -4.90% % Held by Insiders 1 0.23% Gross Profit (ttm) 7.49B % Held by Institutions 1 70.28% EBITDA 5.13B Shares Short (May 29, 2020) 4 20.45M Net Income Avi to Common (ttm) 3.39B Short Ratio (May 29, 2020) 4 1.86 Diluted EPS (ttm) 2.82 Short % of Float (May 29, 2020) 4 1.75% Quarterly Earnings Growth (yoy) -50.50% Short % of Shares Outstanding (May 29, 2020) 4 1.75% Balance Sheet Total Cash (mra) Shares Short (prior month Apr 30, 2020) 4 18.9M 2.63B Total Cash Per Share (mra) 2.25 Dividends & Splits Balance Sheet Total Cash (mra) Shares Short (prior month Apr 30, 2020) 18.9M 2.63B Total Cash Per Share (mra) 2.25 Dividends & Splits Forward Annual Dividend Rate 4 1.64 Total Debt (mra) 22.99B Forward Annual Dividend Yield 4 2.13% Total Debt/Equity (mra) N/A Trailing Annual Dividend Rate 3 1.59 Current Ratio (mra) 0.70 2.07% Book Value Per Share (mra) Trailing Annual Dividend Yield 3 -6.45 5 Year Average Dividend Yield 4 1.67 Cash Flow Statement Operating Cash Flow (ttm) Payout Ratio 55.00% 2.75B Dividend Date May 22, 2020 Levered Free Cash Flow (ttm) 1.22B Ex-Dividend Date May 07, 2020 Last Split Factor 2 2:1 Last Split Date 3 Apr 09, 2015 Previous Close 76.96 90.52B Open 78.79 Market Cap Beta (5Y Monthly) PE Ratio (TTM) 0.80 Bid 77.64 x 1000 27.34 Ask 77.63 x 1200 EPS (TTM) 2.82 Day's Range 52 Week Range 76.39 - 78.92 Earnings Date Jul 28, 2020 Forward 50.02 -99.72 Dividend & Yield 1.64 (2.13%) 8,318,280 Ex-Dividend Date May 07, 2020 Volume Avg. Volume 14,227,451 1y Target Est 80.43 Financial Highlights Trading Information Fiscal Year Fiscal Year Ends Stock Price History Beta (5Y Monthly) Sep 29, 2019 0.80 Most Recent Quarter (mra) Mar 29, 2020 52-Week Change -7.19% S&P500 52-Week Change 3 5.10% Profitability Profit Margin 3 52 Week High 99.72 12.71% 52 Week Low 3 Operating Margin (ttm) 13.72% 50.02 50-Day Moving Average 3 76.96 Management Effectiveness Return on Assets (ttm) 200-Day Moving Average ? 79.72 10.13% Return on Equity (ttm) N/A Share Statistics Return on Equity (ttm) N/A Share Statistics Avg Vol (3 month)? 14.23M Income Statement Revenue (ttm) 16.25M 26.66B Avg Vol (10 day) 3 5 Shares Outstanding 1.17B Revenue Per Share (ttm) 22.42 Float 1.13B Quarterly Revenue Growth (yoy) -4.90% % Held by Insiders 1 0.23% Gross Profit (ttm) 7.49B % Held by Institutions 1 70.28% EBITDA 5.13B Shares Short (May 29, 2020) 4 20.45M Net Income Avi to Common (ttm) 3.39B Short Ratio (May 29, 2020) 4 1.86 Diluted EPS (ttm) 2.82 Short % of Float (May 29, 2020) 4 1.75% Quarterly Earnings Growth (yoy) -50.50% Short % of Shares Outstanding (May 29, 2020) 4 1.75% Balance Sheet Total Cash (mra) Shares Short (prior month Apr 30, 2020) 4 18.9M 2.63B Total Cash Per Share (mra) 2.25 Dividends & Splits Balance Sheet Total Cash (mra) Shares Short (prior month Apr 30, 2020) 18.9M 2.63B Total Cash Per Share (mra) 2.25 Dividends & Splits Forward Annual Dividend Rate 4 1.64 Total Debt (mra) 22.99B Forward Annual Dividend Yield 4 2.13% Total Debt/Equity (mra) N/A Trailing Annual Dividend Rate 3 1.59 Current Ratio (mra) 0.70 2.07% Book Value Per Share (mra) Trailing Annual Dividend Yield 3 -6.45 5 Year Average Dividend Yield 4 1.67 Cash Flow Statement Operating Cash Flow (ttm) Payout Ratio 55.00% 2.75B Dividend Date May 22, 2020 Levered Free Cash Flow (ttm) 1.22B Ex-Dividend Date May 07, 2020 Last Split Factor 2 2:1 Last Split Date 3 Apr 09, 2015 Previous Close 76.96 90.52B Open 78.79 Market Cap Beta (5Y Monthly) PE Ratio (TTM) 0.80 Bid 77.64 x 1000 27.34 Ask 77.63 x 1200 EPS (TTM) 2.82 Day's Range 52 Week Range 76.39 - 78.92 Earnings Date Jul 28, 2020 Forward 50.02 -99.72 Dividend & Yield 1.64 (2.13%) 8,318,280 Ex-Dividend Date May 07, 2020 Volume Avg. Volume 14,227,451 1y Target Est 80.43