How close to the actual stock price is your computed stock value? What does this mean?
In this discussion, you will calculate the dividend yield and the stock price using the Dividend Growth Model (Gordon Model). The average dividend paid on U.S. stocks is right around 2%. A few stocks, such as Exxon, are paying higher dividends of 6 or 7%. This assignment also demonstrates how easy it is to calculate the stock price, which should get you close to the market price of the stock unless the market has been very volatile. Before you begin, be sure to review the following narrated lecture (included in attached documents).
For this discussion, please complete the following tasks: Continue to research Walmart. Include the name in the title of your post. Click to download the discussion table Download discussion table. Enter Walmart in the Search box of MSNMoney (https://www.msn.com/en-us/money?id=a6qja2). Use the following information from the Summary page to complete the discussion table:
The current stock price Earnings Per Share (EPS) Retrieve the Dividend from the Analysis page.
Be sure that you are looking at the Annual data, and not the Quarterly data, and that you are looking at the Dividend per share, not the Year over year (YoY) growth of the dividend.
Compute the Dividend Yield. The Dividend Yield = the Dividend Stock price
From the Profitability section on the Analysis tab, find the Return on Equity (ROE) and record it on the Discussion table.
Compute the stock value using the Dividend Growth Model using the given formulas in the table. Show your work.
Save your completed table.
In your original post, answer the following:
1. First, copy and paste both tables.
2. How close to the actual stock price is your computed stock value? What does this mean?
3. What variables have the most impact on the model?
4. What is the dollar amount and percentage change from the currently computed stock price to your computed stock price one year from now? Does this seem reasonable? Does it seem sustainable?
5. Do you think using the dividend growth model is a good way to value the stock? Why or why not?
Please follow the instructions for the graph portion, then complete the instructions for the post. Please use the numbered questions as headers and answer below each in a matter-of-fact voice. The company to research is Walmart. Please return a Word doc.
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