Loading presentation...

Present Remotely

Send the link below via email or IM


Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.


Siddle Inc.

No description

Moe Aloul

on 6 December 2013

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of Siddle Inc.

Siddle Inc.
Company's Background
Supernormal Growth
- David Boon recommendation
o Required return adjustment and growth rate adjustment
- EPS industry average= (0.79+1.38+1.06)/3= 1.08
- Retention rate= 1-(.40/1.08) = 0.6396
- Industry growth rate= 0.1223(0.6396) = 0.0776

Price/Earning ratio
Price earnings ratio=Market value/EPS

Industry Average Price Earnings Ratio = 76.71/4.54= 16.90

Siddle Inc. Price Earnings Ratio= 64.95/4.54= 14.31

Manufactures and installs commercial heating, ventilation, and cooling (HVAC) unitts
. Owned by Wendy and
Peter Siddle.
. Nine years old.
Constant Growth valuation
P0= D1/(r-g)
D1= $126,000/100,000 shares
= $1.26/shares
Retention rate (b)= 1-Payout ratio
= 1-(1.26/4.54)
= .7225 = 72.25%
Growth rate= .25 * .72246= .1806=18.06%
P0= 1.26/(.20-.1806) =$64.95
P0= Po= [1.26(1.1806)]/1.1167+ [1.26(1.1806)^2]/1.1167^2+[1.26(1.1806)^3]/1.1167^3+[1.26(1.1806)^4]/1.1167^4+[1.26(1.1806)^5]/1.1167^5+[1.26(1.1806)^5(1.0776)]/1.1167^5
Po= $53.33

- 0.0776= ROE(0.7224)
- ROE= 0.0776/0.7224
- ROE= 0.1074
- ROE would go down assuming payout ratio is constant and growth rate matches the industry average in five years

Sell stocks in the form of preferred stocks
· Do not carry voting rights
· Allow owners to retain control over their company
· Attractive to investors
- First in line to receive dividends
- Convertible to common shares
- The right to sell back the shares to the
issuer at an agreed upon price
· Preferred shares are callable owners are able to buy back the common shares at any time
Future Return On Equity Implications

Stock Recommendation
Mahshid Babakhani
Paolo Francisco
Mohammed Alaloul

Price/Earnings relationship
P0/E1= (1-b)/R-(ROE x b)
P0 = $64.94, E1= 4.54, b= 72.246%,
ROE= 25%, R= 20%

64.94/4.54 = (1-.72246)/.2 - (.25 x .72246)
14.317 = 14.30
Sell in order of employee stock option benefit
Full transcript