Valuation of stock through growth model

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Valuation of stock through growth model.

1. Using the framework employed in class, calculate the proportion of MCD's stock price (as of 9/28 close) that reflects its present value of growth opportunities. As points of comparison, repeat the PVGO exercise for Starbucks (ticker: SBUX) and Chipotle Mexican Grill (ticker: CMG) assuming that their costs of equity also are 8% (as is MCD's).

2. Look at the analyst growth estimates for the next 5 years for each of the three companies (use Yahoo!Finance as we did in class). What are these estimated growth rates?

3. Are the PVGO figures correlated with the analyst estimated EPS growth rates? Would you think these two "growth" metrics should be correlated? Why or why not?

4. If you could pick other financial measures (apart from analyst growth expectations) to compare across the 3 companies to help explain the variation in PVGO, what would they be (and why)?

Reference no: EM1316071

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