Stock Valuation at Ragan Engines
Chapter 9 Stock Valuation at Ragan Engines
Input area:
Shares owned by each sibling Ragan EPS Dividend to each sibling Ragan ROE Ragan required return
$ $
150,000 5.08 320,000 25% 20% EPS 1.09 $ 1.16 (0.32) 0.64 $ 1.97 DPS Stock price 0.16 $ 15.19 0.53 12.49 0.54 23.05 0.41 $ 16.91 ROE 11.00% 14.00% 14.00% 13.00% R 14.00% 19.00% 18.00% 17.00%
Blue Ribband Motors Corp. Bon Voyage Marine, Inc. Nautilus Marine Engines Industry average Nautilus EPS w/o write-off
$
$ $
Prospective Output area:
1) Total earnings Payout ratio Retention ratio Growth rate Total dividends next year Total equity value Value per share 2) Industry EPS Industry payout ratio Industry retention ratio Industry growth rate Year 1
$
$ $ $ $
1,524,000.00 41.99% 58.01% 14.5% 2.44 13,326,968.97 44.42
= EPS* # outstandin shares = Devidends/Total earning = 1- Payout ratio g = ROE*b where b is retention ratio
1.41 = Sum of EPS of competitors/3 29.15% = DPS/EPS 70.85% 9.21%
$
732,808.40
2 3 4 5 6 Stock value in Year 5 Total stock value today Value per share 3) Industry PE Ragan PE (original assumption) Ragan PE (revised assumption) Stock price implied by industry PE 4) Total earnings Cash cow value Percentage not attributable to growth opportunities Percentage attributable to growth opportunities 5) ROE
$ $ $ $ $ $
839,075.23 960,752.15 1,100,073.82 1,259,598.97 1,375,619.37 17,660,826.76 $11,056,024.78 36.85 12.02 8.74 7.25
$
$
8,964,705.88 81.08%
18.92% 15.88%
6) Retaining more percentage of companies earnings and investing the money on new methods make the engines more efficient that will generate more profits.
Input area:
Shares owned by each sibling Ragan EPS Dividend to each sibling Ragan ROE Ragan required return
$ $
150,000 5.08 320,000 25% 20% EPS 1.09 $ 1.16 (0.32) 0.64 $ 1.97 DPS Stock price 0.16 $ 15.19 0.53 12.49 0.54 23.05 0.41 $ 16.91 ROE 11.00% 14.00% 14.00% 13.00% R 14.00% 19.00% 18.00% 17.00%
Blue Ribband Motors Corp. Bon Voyage Marine, Inc. Nautilus Marine Engines Industry average Nautilus EPS w/o write-off
$
$ $
Prospective Output area:
1) Total earnings Payout ratio Retention ratio Growth rate Total dividends next year Total equity value Value per share 2) Industry EPS Industry payout ratio Industry retention ratio Industry growth rate Year 1
$
$ $ $ $
1,524,000.00 41.99% 58.01% 14.5% 2.44 13,326,968.97 44.42
= EPS* # outstandin shares = Devidends/Total earning = 1- Payout ratio g = ROE*b where b is retention ratio
1.41 = Sum of EPS of competitors/3 29.15% = DPS/EPS 70.85% 9.21%
$
732,808.40
2 3 4 5 6 Stock value in Year 5 Total stock value today Value per share 3) Industry PE Ragan PE (original assumption) Ragan PE (revised assumption) Stock price implied by industry PE 4) Total earnings Cash cow value Percentage not attributable to growth opportunities Percentage attributable to growth opportunities 5) ROE
$ $ $ $ $ $
839,075.23 960,752.15 1,100,073.82 1,259,598.97 1,375,619.37 17,660,826.76 $11,056,024.78 36.85 12.02 8.74 7.25
$
$
8,964,705.88 81.08%
18.92% 15.88%
6) Retaining more percentage of companies earnings and investing the money on new methods make the engines more efficient that will generate more profits.