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In its most recent quarterly earnings report, Smith Brothers Garden Supplies said it planned to increase its dividend at an annual rate of 5% for the foreseeable future. Analyst Anton Spears is using a required return of 9.5% for Smith Brothers stock. Smith Brothers stock trades for $52.17 per share and earned $3.01 per share over the last 12 months. The company paid a dividend of $2.15 per share during the last 12-month period, and its dividend-growth rate for the last five years was 9.2%. Using the Gordon Growth model, the share price for Smith Brothers stock is most likely:
The Gordon Growth model is as follows:
Value = [dividend × (1 + dividend growth rate)] / [required return − growth rate]| Value | = [2.15 × 1.05] / [0.095 − 0.05] | | = 2.2575 / [0.095 − 0.05] | | = 50.17 |
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发表于 2012-3-31 11:51
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