Question
Use the following information on Disney to answer the case questions. Disney's current stock price is $140.00 per share. The average growth rate of the
Use the following information on Disney to answer the case questions.
Disney's current stock price is $140.00 per share. The average growth rate of the company's dividend has been 17.7% from 2004 through 2018.
Disney's return on equity is 28.0% and the company retains approximately 80.0% of its profits while paying out the remaining 20.0% in dividends.
The company's stock currently trades at 21.21 times its current year earnings estimate of $6.60 per share.
Analysts expect the company to earn $6.19 per share in 2020 and $6.93 in 2021.
Disney's peers in media networks trade at 25.5 times their current year earnings estimates while peers in parks, experiences and consumer products at 21.9; studio entertainment at 19.1 and DTCI at 14.1.
Assume the expected return for Disney's stock is 6.9%.
1.0 What is Disney stock's intrinsic value using each of the four models?
1.1 Constant Growth Model
1.2 Multi-Stage Growth Model
1.3 Discounted Dividend Model
1.4 Market Multiples Approach
2.0 Reconcile Disney stock's intrinsic value, considering the strengths and weaknesses of each valuation approach.
3.0 After completing the Terminal Tutorial, attach a screenshot of the GP function screen comparing Disney to the S&P 500 from August 1, 2018, to August 1, 2019. Describe in one sentence if and how the comparison has changed from what was shown in the video.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started