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Stock Valuation and Financial Analysis of a Moderately Growing Company

An assignment focusing on financial analysis and stock valuation of a company experiencing moderate growth.

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    Analysis of Stock Price The company analyzed has expected cash flow of $ 320 million in 2009 and it is expected to reach $ 350 million in 2010. Company under evaluation is moderate growth stock its growth rate of its cash flows is calculated as Year Cash Flow Cash flow growth rate Final year cash flow - initial year cash flow/ initial year cash flow 2009 $ 325.00 2010 $ 350.00 7.69% 2011 $ 400.00 14.29% 2012 $ 425.00 6.25% 2013 $ 450.00 5.88% All figure in $ millions As this publically traded addresses efficient market hypothesis it means all the internal and external information about the company is in public domain. Analyzing summary of information of company’s stock 52 - week range: High 75 Low 35 52 week range denotes the range of the company’s share price in last one year 52 week high is the maximum price at which stock of the company has traded in past one year so 52 week high of 75 means maximum share price of this company in last one year is 75.

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    52 week low means that minimum price at which stock of the company has traded in past one year so 52 week low of 35 means minimum share price of this company in last one year is 35. Calculation of 52 week range 52 week range is calculated by analyzing company’s stock price history of past one year and then identifying the maximum and minimum stock price during the period of evaluation. Current stock price Current stock price is the price at which stock of the company is currently trading. It is also known as market value of stock. Calculation of Current stock price Current stock price is price at which current supply and demand curve for that stock are in equilibrium. It can generally be obtained from market data available on various online databases like Yahoo Finance or Factiva. Current price of 60 denotes that currently stock of company is trading at $ 50. Dividend Yield Dividend yield is defined as return on investment share holder is getting through the payment of cash dividend. Calculation of Dividend Yield Dividend yield is calculated by dividing dividend paid per share with current stock price.

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