An equity evaluator uses a number of different procedures for the valuation of Wal-Mart stock, with the aim of giving a buy/sell or hold suggestion for the shares.
Cash Flow Statement
Earnings and Dividends
Price of Stock
Constant Dividend Growth Model
Dividend and Terminal Value
Price Earning Multiple Approach
Three Stage Approach
1. As of February 2010, what is your assessment of the worth of Wal-Mart's stock? Utilize all of the methods discussed in the case of value shares, including the following:
a) The perpetual growth in dividends.
b) Forecasted dividends for the next several years plus sale of the stock in the future. c) The price/earnings approach.
2. Clearly state any assumptions.
3. Based on your analysis, as Sabrina Gupta, what recommendation would you make?