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.


Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

Valuing Coca cola stock

coca cola presentation

Shihao Wu

on 11 September 2014

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of Valuing Coca cola stock


Team members :
Hang Dang
Lulu Wang
Liqing Zhang
Stephen Malachowski
Shihao Wu
Risk-free bonds
90 days treasury bill
5 year bond
10 year bond
30 year bond
Dividend Discount Model (DDM) Cont'd

G @ foretasted 12%

G @ historical rate 10.60%

Dividend Discount Model (DDM) Cont'd
Growth rate

Dividend Discount Model (DDM) Cont'd
Calculate dividend

Price/Earnings Multiple
Q & A
1. Capital Asset Pricing Model(CAPM)
2. Dividend Discount Model(DDM)
3. Price/Earnings Multiple(P/E)
Sensitivity Analysis & Results
Sensitivity analysis for raw vs. adjusted, risk-free rate proxies
Our Focus and DDM
The 5-year estimated required rate of return
- Match time horizon with proxy
Adjusted Beta
- Mean reversion and historical trends

Po=D1/( R-G ) $50.41 estimated, $58 actual
P/E Multiple Method & More
Coca Cola: P/E of 35 and an estimated EPS for 1998 of $1.95.
- Po = EPS1 * P/E = $68.25, $58 actual

Slight differences between the two valuations

- Overpricing/Underpricing
- Accounting Forecasts vs. Cash Dividend Forecasts

Found in 1886, Atlanta, Georgia
1997, A large beverage company
Jessie Jones
Make a recommendation for investors
1. Introduction
2. Methodology
3. Analysis
4. Recommendation
We choose DDM valued Coke's stock at $50.41 invest moderately.
Only small difference, Coke is growing.
P/E showing a stock price of $68.25

The market is undervaluing Coke

Invest if you like risk.

BOTH models are only estimates.

Never lose your money
Rf = risk-free rate
B = Beta of security
Rm-Rf = the market premium
adjusted Beta vs raw Beta
0.67*Raw beta + 0.33*1
Adjusted beta =
1. Raw beta & history data
2. Mean reversion
* No historical data
* Too long
Course: Advanced Financial
Professor: Lei Wedge
Dividend Discount Model
Po=D1/( R-G )
Earning per share/Book per share
ROE* Plowback ratio=1-
Discounted future dividend
P=EPS*P/E multiple

for $1 profit
Varied (time & industry)
compare prices
Full transcript