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

  1. 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.
    1. 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.
    2. Provide a rationale for the stock valuation method you chose for each stock. Cite specific information to support your decisions.
    3. 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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