Amir, a consultant hired by Shahrin and Zarina, believes the company's growth assumptions need revising. While Shazz currently has a technological advantage, Amir's research found competitors are pursuing efficiency improvements. He believes Shazz's advantage will last only 5 years, after which growth will slow to the industry average. Amir also believes the company's required return is too high and the industry average of 11.67% is more appropriate. Recalculating with these assumptions, Amir estimates the stock price at RM78.2642 per share.
Amir, a consultant hired by Shahrin and Zarina, believes the company's growth assumptions need revising. While Shazz currently has a technological advantage, Amir's research found competitors are pursuing efficiency improvements. He believes Shazz's advantage will last only 5 years, after which growth will slow to the industry average. Amir also believes the company's required return is too high and the industry average of 11.67% is more appropriate. Recalculating with these assumptions, Amir estimates the stock price at RM78.2642 per share.
Amir, a consultant hired by Shahrin and Zarina, believes the company's growth assumptions need revising. While Shazz currently has a technological advantage, Amir's research found competitors are pursuing efficiency improvements. He believes Shazz's advantage will last only 5 years, after which growth will slow to the industry average. Amir also believes the company's required return is too high and the industry average of 11.67% is more appropriate. Recalculating with these assumptions, Amir estimates the stock price at RM78.2642 per share.
Amir, a consultant hired by Shahrin and Zarina, believes the company's growth assumptions need revising. While Shazz currently has a technological advantage, Amir's research found competitors are pursuing efficiency improvements. He believes Shazz's advantage will last only 5 years, after which growth will slow to the industry average. Amir also believes the company's required return is too high and the industry average of 11.67% is more appropriate. Recalculating with these assumptions, Amir estimates the stock price at RM78.2642 per share.
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1.
Assuming the company continues its current growth rate, what is the value per share of the company’s stock?
Shazz Corporation is equally owned by Shahrin and Zarina. The total is 100 000 share dividend to Shahrin and Zarina of RM54,000 each. The total is RM108 000
ROE = 0.25 K = 0.2 EPS = RM4.32 Retention Ratio(b) = 1- D NI = 1- 108 000 432 000 = 1 - 0.25 = 0.75
100 000 Share = RM 102.60 Per Share 2. To verify their calculations, Shahrin and Zarina have hired Amir as a consultant. Amir was previously an equity analyst. Amir has examined the company’s financial statements as well as those of its competitors. Although Shazz currently has a technological advantage, Amir’s research indicates that Shazz’s competitors are investigating other methods to improve efficiency. Given this, Amir believes that Shazz’s technological advantage will last for only the next five year. After that period, the company’s growth will likely slow to the industry average. Additionally, Amir believes that the required return the company uses is too high. He believes the industry average required return is more appropriate. Under Amir’s assumptions, what is the estimated stock price?
Setara Corporation’s negative earnings per share were the result of an accounting write off last year. Without the write-off, EPS for the company would have been RM2.34. we need to recalculate the EPS :
EPS of Industry = 0.82 + 1.32 + 2.34
3 = 4.48 3 = 1.4933 ROE = 0.13 k = 0.1167 P = RM 25.43 DPS = RM 0.41 Growth Rate(g) = 0.1815 D = RM 1.08
Retention Ratio(b) = 1- D NI = 1- 0.41 1.4933 = 1 - 0.2746 = 0.7254
