4. Given are stock price, net assets (total stockholders\' equity), share outsta
ID: 2741812 • Letter: 4
Question
4. Given are stock price, net assets (total stockholders' equity), share outstanding, and annual revenues for 2014 of the chemical companies.
Stock Price: DuPont (74.04), Dow (51.69), PPG (224.55)
Net Assets, in millions: DuPont (49876), Dow (68796), PPG (17583)
Shares Outstanding, in millions: DuPont (905), Dow (1150), PPG (136)
Sales, 2001, in millions: DuPont (34723), Dow (58167), PPG (15360)
Book Value Per Share: Dupont (______), Dow (___________), PPG (________)
Market-to-Book Ratio: Dupont (_________), Dow (________), PPG (________)
Calculate the market value, the sales to net assets, and sales to market value ratios.
Market Value, in millions: Dupont (_______), Dow (_______), PPG (_______)
Sales-to-Net Assets: Dupont (_______), Dow (_______), PPG (_______)
Sales-to-Market Value: Dupont (______), Dow (______), PPG (_______)
5. Use the earnings growth model [P = kE / (r - g)] to estimate projected stock price, assume the S&P 500 rate of return (r) is 12%.
Stock Price: DuPont 74.04, Dow 51.69, PPG 224.55
EPS Du Pont 3.5, Dow 2.87, PPG 8.35
Dividend Payout Du Pont 53.00% Dow 49.00% PPG 32.00%
5 Yr Earning Growth Du Pont 8.70% Dow 9.40% PPG 10.20%
Projected Price: DuPont ________ Dow _____ PPG _____
Overvalued / Undervalued: DuPont ______ Dow ______ PPG _______
6. Given the information below, calculate stock price to intrinsic value. Are these stocks overvalued or undervalued?
Stock Price, 5/1/2015 Du Pont 74.04 Dow 51.69 PPG 224.55
Annual Earnings (in millions) Du Pont 3168 Dow 3301 PPG 1136
5 Year Earnings Growth Rate Du Pont 8.39% Dow 8.59% PPG 10.68%
Discount Rate Du Pont 11% Dow 11% PPG 11%
Intrinsic Value per Share Du Pont 89.41 Dow 68.63 PPG 218.7
Stock Price to Intrinsic Value: Du Pont ______ Dow _____ PPG _____
Overvalued / Undervalued: Du Pont ______ Dow ________ PPG _____
Explanation / Answer
5)
price of DuPont
= 3.5 * 0.53 /12% -8.7% = 56.21
price is overvalued
price of Dow
= 2.87 * 0.49/12%-9.4%
= 54.09
price is under valued
price of PPG
= 8.35 * 0.32/12% - 10.20%
= 148.44
price is over valued
6)
stock price to intrinsic value
of duPont = 74.04/89.41 = 0.8281 (under valued)
of dow = 51.69/68.63 = 0.7532 (under valued)
of PPG = 224.55/218.7 = 1.0268 (over valued)
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