博迪投资学第八版课件Chap018.pptVIP

CHAPTER 18 Equity Valuation Models Pitfalls in P/E Analysis Use of accounting earnings Earnings Management Choices on GAAP Inflation Reported earnings fluctuate around the business cycle Figure 18.3 P/E Ratios of the SP 500 Index and Inflation Figure 18.4 Earnings Growth for Two Companies Figure 18.5 Price-Earnings Ratios Figure 18.6 P/E Ratios for Different Industries, 2007 Other Comparative Value Approaches Price-to-book ratio Price-to-cash-flow ratio Price-to-sales ratio Figure 18.7 Market Valuation Statistics Free Cash Flow Approach Discount the free cash flow for the firm Discount rate is the firm’s cost of capital Components of free cash flow After tax EBIT Depreciation Capital expenditures Increase in net working capital Comparing the Valuation Models In practice Values from these models may differ Analysts are always forced to make simplifying assumptions The Aggregate Stock Market Explaining Past Behavior Forecasting the Stock Market Figure 18.8 Earnings Yield of SP 500 versus 10-Year Treasury-Bond Yield Table 18.4 SP 500 Price Forecasts Under Various Scenarios 18-* Bodie, Kane and Marcus Slides by Susan Hine McGraw-Hill/Irwin Copyright ? 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Balance Sheet Models Book Value Dividend Discount Models Price/Earning Ratios Models of Equity Valuation Table 18.1 Financial Highlights for Microsoft Corporation, October 25, 2007 Limitations of Book Value Book value is an application of arbitrary accounting rules Can book value represent a floor value? Better approaches Liquidation value Replacement cost Expected Holding Period Return The return on a stock investment comprises cash dividends and capital gains or losses Assuming a one-year holding period Required Return CAPM gave us required return: If the stock is priced correctly Required return should equal expected return Intrinsic Value Self assigned Value Variety of models are used for estimation Market Price Consensus value of all potential trade