Your manager suggests determining the price based on a discounted dividend model and a discounted free cash flow valuation method. However, these two methods may produce very different estimates when applied to actual data. Based on the data below, if you compare the stock price derived from these two methods to the actual stock price. Based on your price estimates, what is your recommendation as to whether the client should buy or sell Company X's stock?

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In thousands of dollars Total Revenue Depreciation Amortization Depletion Pretax Income Tax Provision EBIT 2022/12/30 2021/12/30 12/30/2020 2019/12/30 60,530,000 57,351,000 73,621,000 77,147,000 1,062,000 1,116,000 1,123,000 762,000 1,156,000 4,837,000 4,637,000 10,166,000 -626,000 124,000 -864,000 731,000 2,372,000 5,992,000 5,925,000 11,510,000 In thousands of dollars Total Revenue Depreciation Amortization Depletion Pretax Income Tax Provision EBIT 2022/12/30 2021/12/30 12/30/2020 2019/12/30 60,530,000 57,351,000 73,621,000 77,147,000 1,062,000 1,116,000 1,123,000 762,000 1,156,000 4,837,000 4,637,000 10,166,000 -626,000 124,000 -864,000 731,000 2,372,000 5,992,000 5,925,000 11,510,000 In thousands of dollars Total Revenue Depreciation Amortization Depletion Pretax Income Tax Provision EBIT 2022/12/30 2021/12/30 12/30/2020 2019/12/30 60,530,000 57,351,000 73,621,000 77,147,000 1,062,000 1,116,000 1,123,000 762,000 1,156,000 4,837,000 4,637,000 10,166,000 -626,000 124,000 -864,000 731,000 2,372,000 5,992,000 5,925,000 11,510,000 In thousands of dollars Total Revenue Depreciation Amortization Depletion Pretax Income Tax Provision EBIT 2022/12/30 2021/12/30 12/30/2020 2019/12/30 60,530,000 57,351,000 73,621,000 77,147,000 1,062,000 1,116,000 1,123,000 762,000 1,156,000 4,837,000 4,637,000 10,166,000 -626,000 124,000 -864,000 731,000 2,372,000 5,992,000 5,925,000 11,510,000

Answer rating: 100% (QA)

To determine whether the client should buy or sell Company Xs stock we need to compare the stock pri... View the full answer