Quantitative analysis of the TIMELINESS and TECHNICAL ratings shown in the upper left$-$hand

corner of your stock$$s Value Line Investment Survey $($VLIS$)$ report.

Note: the Technical rating predicts short$-$term

performance $(0$ to $6$ months$)$ while the Timeliness rating predicts longer$-$term $(6$ months plus$).$

Our first step in evaluating these is to estimate the stock$$s long$-$term average growth rate,

implied by the current stock price, using a two$-$stage dividend discount model. Note: this APProach is very similar to the example your textbook works through on pp to the example your textbook works through on pp$\mathrm{.}406-409$ using the

Chevron VLIS report, except it estimates the terminal growth rate based on the b x ROE formula,

and then solve for the stock value, whereas we$$re taking the current stock price as given and

backing out the implied terminal growth rate. If your stock does not pay a dividend, you$$ll need

to use the FCFE$-$based version of the model explained on page $419$ of Chapter $13.$