*What is Disney stock's intrinsic value using constant growth model,Multi-Stage Growth Model, discounted dividend model?*

DISNEY'S NUMBERS

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%.

THE FOUR MODELS

Constant Growth Model The constant growth model, also known as the Gordon Growth Model, discounts future cash flows, or dividends, under theassumption that a company's dividends grow at a constant rate forever. The intrinsic value of a company's equity is calculated by dividing a company's dividend for next year, labelled D1, by the difference between the stock's expected return, labelled k, and its dividend growth rate, labelled g.

A primary weakness of the constant growth model is that very few, if any, companies grow their dividends at a constant growth rate. This central condition is unreasonable and unlikely to ever be met by any company. The graph below shows the dividend growth rates for The Walt Disney Company since 2004. It is clear that there is nothing constant about its dividend growth.