Part I Task-list.

Analysis of Walt Disney Corporation

Group # 10

Professor:

Yulia B. Ilina

Group Members:

Afanasyeva Ekaterina

Andreeva Ekaterina

Belyaeva Tatiana

Chumak Anastasia

Konchalenkov Dmitry

Kopp Grigory

Prisivko Viacheslav

Toeroek Julianna

Saint-Petersburg

Contents

Part I Task-list. 3

Chapter 1. General characteristics of the company. 4

Chapter 2. Valuing bonds. 8

Industry. 12

Composite Bond Rate. 14

Conclusion.. 15

Chapter 3. Valuing stocks. 16

General description of Walt Disney Company stocks. 16

Stocks Evaluation.. 18

Market Impact on Company’s Stock. 20

Chapter 4. Estimating cost of capital. 21

Cost of common stock. 24

1. CAPM.. 24

2. Dividend-Yield-Plus-Growth-Rate or Discounted Cash Flow Approach.. 26

3. Over-own-bond-yield-plus-judgmental-risk-premium approach.. 30

Comparison of the models: 31

The cost of capital 31

References: 33

Table of Figures. 35

Part I Task-list.

1. General characteristics of the company

Organizational form, owners, size, industry, markets it is operating in, main competitors, key data on securities etc.

2. Valuing bonds:

Bonds issue should be analyzed, specifying the following characteristics of the offering: underwriters, credit rating, purposes (project financing, mergers & acquisitions etc.), amount of the issue, coupon rate, term, callable or non-callable, secured or not, yields and price dynamics, fair value (based on valuation models discussed in class), factors that influenced the price and yields, financial crisis impact, and special information (if available): if there were defaults on bonds or some other features. As company could have issued different types and tranches of bonds, you are supposed to provide general information on these types, but choose the most recent one for your valuation.

3. Valuing stocks:

Describe the company’s stocks in general: what market are they traded on? What are types (type) of stocks did the company issue? What is the dividend history for the recent period (3-5 years)? Provide company’s stock’s valuation and estimation of the stock return for the current moment, based on both dividend discount models and CAPM.

Estimate company’s beta coefficient. Use stock’s and market returns on a monthly or weekly basis (depends on the liquidity) at least for 2 years. For calculation of the returns use closing (settlement) prices of the day as available from the trading systems or other sources of data. As a market return take a market index (RTS, S&P 500 etc.).

Describe the current situation with company’s stocks. What factors (economic, industry-specific, and company-specific) do impact the market for company’s stock? Make conclusions.

4. Estimating cost of capital:

Estimate company’s cost of equity, cost of debt and WACC, based on various methods considered in the course. Ignore flotation costs. Use book values for both debt and equity as weights if market data on the debt is not available.

Make conclusions, what factors impact your company’s cost of capital, what specific features you may indicate. Did different methods of estimation of the cost of equity demonstrate the same result? What methods used would you recommend for the company and investors while estimating the cost of capital?

Date: 2015-01-29; view: 985