You’re a financial advisor and one of your clients comes to you for advice. He wants to invest in company XYZ. What would be your first steps in order to help your client?
After taking those required steps you investigate the financial data, you find out that the current stock price is $87.50. The company has grown at an average of 15.2% for the past 10 years. The current rate of inflation is 3% and the current 30 year bond yield is 2%. The most recent, Free cash flow information is $750M., and there are 2.4 billion shares outstanding. Using the DCF valuation method used in class, what would you recommend to your client and why?
Show all work that you used to come up with this advice.