intrinsic value ... $39 , page-4

  1. 14,217 Posts.
    lightbulb Created with Sketch. 123
    Let's do a back of the envelop calculation using a simplified dividend discount method

    consensus forecast growth = 16%

    analysts tend to be a bit over optimistic so lets discount the growth forcast by 25%

    instead of 16% lets make it 12%

    expected rate of return = 15%
    dividend doesn't increase = $1.21

    1.21/ (.15 - .12) = 1.21/.03 = $40.33 (similar to clime's intrinsic value

    lets assume the dividend increases to $1.31 and growth goes to 10%
    $1.21 / (.15 - .10) = 1.21/ .05 = $24.20


    zero growth

    earnings = $2.58
    divi = $0.00

    $2.58/.15 = $17.20


    so zero growth $17.20
    10% growth $24.20
    12% growth $40.33

    of course you could be assuming that the company will not make a profit
    If so the price would go below $17
    But I can't imagine that happening at this stage
    Has BHP ever not made a profit?
 
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Last
$38.73
Change
-0.540(1.38%)
Mkt cap ! $196.5B
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