Question: Stock Analysis In this section, you will select five stocks from the provided list and determine their values by applying an appropriate valuation model from
- Stock Analysis In this section, you will select five stocks from the provided list and determine their values by applying an appropriate valuation model from the following options: price to multiple model (earning or sales), dividend valuation model, or free cash flow to equity valuation model.
- Determine the value of each stock by using an appropriate model based on the characteristics provided for each stock; use each model at least once.
- Provide a rationale for the stock valuation method you chose for each stock. Cite specific information to support your decisions.
- Using the calculated valuation, the current market price, and historical performance, determine the expected return for each stock.
| Symbol | Estimated beta | Dividends per share - Annual | Earnings per share - Annual | Sales per share - Annual | Free cash flows per share - Annual | 5 year dividend growth | Average industry PE ratio | Average industry P/S ratio | Free cash flow growth |
| IBM | 0.86 | 6.59 | 1.8 | 66.35 | 9.28 | 13.7% | 23.7 | 1.12 | 2.6% |
| KO | .66 | 1.76 | 2.19 | 9.89 | 2.19 | 8.3% | 22.6 | 2.2 | 6.5% |
| BMY | .78 | 2.19 | 2.95 | 21.51 | 5.57 | 2.9% | 24.5 | 3.37 | N/A |
| ORCL | 1.1 | 1.28 | 2.41 | 15.23 | 1.81 | 21.1% | 20.5 | 4.45 | 10% |
| NFLX | 1.57 | NONE | 9.95 | 70.06 | 3.59 | N/A | 52.5 | 6 | N/A |
Market return = 13.5% and the Risk Free Rate is 3.5%
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