公司金融课件 6.Stock.docVIP

STOCK VALUATION “…changes in security prices are fundamentally unpredictable and this result is a natural consequence of well- functioning capital markets… …when we use the concept of present value to price common stocks, we are not promising you a key to investment success; we simply believe that the idea can help you understand why some investments are priced higher than others.” Brealey Myers COMMON STOCK VALUATION Cash payback to stocks comes in two forms: Cash dividends Capital gains or losses Terms: P0 - Current price per share P1 - Price per share in 1 year’s time D1 - Expected dividend per share in 1 years’s time r - Expected return on similar securities Basic equation for an investor, recognizing that payback comes from both dividends and capital gains: P0 = D1 + P1 1 + r P0 = Dt/(1+r)t + Pn/(1+r)n P0 = Dt/(1+r)t THE PRICE OF A SHARE IS EQUAL TO THE PV OF ALL FUTURE DIVIDENDS Two Normal Reactions 1st: That the dividend pricing model for a common stock ignores capital gain, which is why people buy stocks such as Microsoft . The formula was derived from the assumption that price in any period is determined by expected dividends and capital gains over the next period. 2nd: But the model requires that the analyst know all future dividends and that isn’t possible. This is a real problem. The dividend-pricing model is difficult to use but that doesn’t undermine the conceptual importance of the basis framework. We simply have to use the model with the available information to assist us in estimating the value of stocks and to understand why one stock is priced higher than another. SPECIAL CASES CONSTANT GROWTH Many established companies pride themselves on achieving constant growth, in both earnings and dividends, over an extended period of time. Such a forecast does not preclude year-to-year deviations from the trend. Since prices are all based on expectations, it simply means that constant growth is expected