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Analyzing Growth Rates and Changing Consumer Preferences in the Industry

Explore the impact of two different growth rates from 2014-2019, industry projections, sensitivity analysis, and financial models to determine the best valuation for decision-making.

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Analyzing Growth Rates and Changing Consumer Preferences in the Industry

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Presentation Transcript

  1. Module 9 Alysha Zimmerman

  2. Introduction

  3. Comparables

  4. Growth Rate • Two different growth rates • 2014-2016 – 1.2% • 2017-2019 – 2.5% • Growth Rate increases from 1.2% to 2.5% • industry as a whole is projected to grow only 1% • the industry giants should eventually recover from this change in consumer preference Change in Consumer Preference

  5. Sensitivity Analysis Growth Rate – 1.2% Cost of Capital – 8.66% • Less confident with this calculation • Different than Bloomberg’s • 7.7% • Least confident with this short term growth rate • Should it be decreased? • Industry expected growth – 1% • 2013 sales growth • 0.03% • approximately $2 million increase in sales • 2012 sales growth • 1.56%

  6. Sensitivity Analysis Recommendation: SELL

  7. Enterprise Value

  8. Equity Value

  9. Value Line Report

  10. Value Line Forecasts

  11. Dividend Discount Model

  12. Residual Income Model

  13. Summary of 3 Models Stock Price (from VL) $48.04 Backing out NFL $44.99 Dividend Discount Model $49.06 Residual Income Model $54.09 Which model is better?

  14. Questions?

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