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    Homework 6: FIN 321, Winter 2020-2021 Joseph Kalmenovitz

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    Muhammad Hamza Amin
    This document contains instructions for Homework 6 questions regarding Home Depot (HD). It includes extracting consensus estimates for HD's dividend per share and earnings per share from FactSet for the next four quarters. It also involves finding information on HD's payout ratio, buybacks, dividends, and levered beta from its most recent 10-K and FactSet. Using this financial information, students are asked to calculate HD's discount rate, intrinsic value using the Gordon Growth Model, and determine if they would buy HD stock based on the current price.

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    Homework 6: FIN 321, Winter 2020-2021 Joseph Kalmenovitz

    Uploaded by

    Muhammad Hamza Amin
    13 views1 page
    This document contains instructions for Homework 6 questions regarding Home Depot (HD). It includes extracting consensus estimates for HD's dividend per share and earnings per share from FactSet for the next four quarters. It also involves finding information on HD's payout ratio, buybacks, dividends, and levered beta from its most recent 10-K and FactSet. Using this financial information, students are asked to calculate HD's discount rate, intrinsic value using the Gordon Growth Model, and determine if they would buy HD stock based on the current price.

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    This document contains instructions for Homework 6 questions regarding Home Depot (HD). It includes extracting consensus estimates for HD's dividend per share and earnings per share from FactSet for the next four quarters. It also involves finding information on HD's payout ratio, buybacks, dividends, and levered beta from its most recent 10-K and FactSet. Using this financial information, students are asked to calculate HD's discount rate, intrinsic value using the Gordon Growth Model, and determine if they would buy HD stock based on the current price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    13 views1 page

    Homework 6: FIN 321, Winter 2020-2021 Joseph Kalmenovitz

    Uploaded by

    Muhammad Hamza Amin
    This document contains instructions for Homework 6 questions regarding Home Depot (HD). It includes extracting consensus estimates for HD's dividend per share and earnings per share from FactSet for the next four quarters. It also involves finding information on HD's payout ratio, buybacks, dividends, and levered beta from its most recent 10-K and FactSet. Using this financial information, students are asked to calculate HD's discount rate, intrinsic value using the Gordon Growth Model, and determine if they would buy HD stock based on the current price.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    FIN 321, Winter 2020-2021 Joseph Kalmenovitz

    Homework 6

    Question 1
    From FactSet, extract the consensus estimates for Home Depot’s dividend per share (DPS) and
    earnings per share (EPS) for the next four fiscal quarters, starting from April 2021.
    • What is the consensus estimate for DPS? For EPS?
    • What is the implied plowback ratio and payout ratio?
    • What was HD’s average payout ratio for the 14 fiscal quarters between October 2020-July
    2017? Calculate the average based on the information in the “Income Statement” tab.

    Question 2
    From FactSet, extract Home Depot’s most recent Form 10-K for fiscal year 2019.
    • When was the report filed? What was the lag relative to the end of the fiscal year?
    • How much did HD spend on buybacks in the full fiscal year 2019?
    • How much did HD spend on dividends in the full fiscal year 2019?
    • How much does HD plan to spend on repurchase in the near future?
    • Suppose HD will spend the entire dollar amount left in the program to buy back all the
    outstanding shares. What would be the “special dividend” per share?

    Question 3
    On FactSet, find HD’s raw levered beta calculated over 3 years.
    • What is HD’s discount rate? Assume risk-free rate of 1.5% and market risk premium of 5%.

    Question 4
    Use the Gordon model to answer the following questions. Assume HD’s growth rate is 2.5%.
    • What is HD’s intrinsic value? Compared to its stock price, would you buy the stock? Why?
    • How would your answers change if we use HD’s unlevered beta?
    • How would your answers change if we ignore the “special dividend” from repurchases?

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