Estimating Share Value Using the DCF Model Following are forecasts of sales, net operating profit…
Estimating Share Value Using the DCF Model
Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 31, 2013, for Wal-Mart Stores, Inc.
Answer the following requirements assuming a discount rate (WACC) of 7%, a terminal period growth rate of 1 %, common shares outstanding of 3,3 14 million, net nonoperatingob ligations (NNO) of $46,874 million, and noncontrolling interest (NCI) on the balance sheet of $5,395 million .
a. Est.imate the value of a share of Wal-Mart's common stock using the discounted cash flow (DCF) mode l as of January 3 1, 2013.
b. Wal-Mart (WMT) stock closed at $74 .77 on March 26, 20 I 3, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?