Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. Module Reported Forecast Horizon Period Terminal $ millions 2018 2019 2020 2021 2022 Period $108,203 $115,777 $123,882 $132,553 $141,832 $144,669 12,073 12,967 13,875 14,846 15,885 16,203 25,546 27,332 29,245 31,292 33,483 34,152 Sales NOPAT NOA Answer the following requirements assuming a discount rate (WACC) of 7.85 %, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 519 x b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? Stock price is appropriately valued +
Estimating Share Value Using the DCF Model Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. Module Reported Forecast Horizon Period Terminal $ millions 2018 2019 2020 2021 2022 Period $108,203 $115,777 $123,882 $132,553 $141,832 $144,669 12,073 12,967 13,875 14,846 15,885 16,203 25,546 27,332 29,245 31,292 33,483 34,152 Sales NOPAT NOA Answer the following requirements assuming a discount rate (WACC) of 7.85 %, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 519 x b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? Stock price is appropriately valued +
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Transcribed Image Text:Estimating Share Value Using the DCF Model
Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018.
Module
Forecast Horizon Period
Reported
Terminal
$ millions 2018
2019
2020
2021
2022 Period
Sales
$108,203 $115,777 $123,882 $132,553 $141,832 $144,669
12,073 12,967 13,875 14,846 15,885 16,203
25,546 27,332 29,245 31,292 33,483 34,152
NOPAT
NOA
Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $27,424
million.
Required
a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019.
Note: Do not round until your final answer; round your final answer to two decimal places.
Stock price per share: $ 519
b. Home Depot stock closed at $190.06 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?
Stock price is appropriately valued ✰
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