Foot Locker
Autor: Herailin • November 30, 2016 • Case Study • 390 Words (2 Pages) • 524 Views
Group Case #1
Foot Locker,Inc.
Jingyi LI
Jianshu LI
Jianmin ZHU
Shui HONG
2.
Historical Dividend Data | |||||
Year | 2010 | 2011 | 2012 | 2013 | 2014 |
Dividend | 0.6 | 0.645 | 0.705 | 0.78 | 0.86 |
Growth Rate | 7.50% | 9.30% | 10.64% | 10.26% | |
Average |
|
|
|
| 9.42% |
The discount rate r= rf+β*rM=3%+1.25*7%=11.75%, therefore
Price/Share=Div2014*(1+g)/(r-g)=$40.46
Value=$40.46*143.71=$5814.84 million
3.
From the financial statement of Foot Locker, the earnings per share is 3.04.
Comparable P/E Ratio | |||
Company | P/E | Price | |
Primary Competitor: The Finish Line | 19.71 | 59.92 | |
Industry Leader: The Gap, Inc | 16.81 | - | |
| Industry Average | 18.26 | 55.51 |
4.
Among three methods, FCFE is considered to be the most reasonable valuation method. For a company, the value is not affected by single factor. Company’s performance on company’s capital in short-term investments cannot include in dividend or P/E ratio. In a word, FCFE method considers more factors in the company to make the final value of the company more accurate.
5.
a.
The discount rate r= rf+β*rM=3%+1.25*7%=11.75%
If the annual cash flow of synergy is 200 million, the present value of synergy is:
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