Dividend Discount Model (DDM)
In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Intrinsic Stock Value (Valuation Summary)
AutoZone Inc., dividends per share (DPS) forecast
US$
| Year | Value | DPSt or Terminal value (TVt) | Calculation | Present value at |
|---|---|---|---|---|
| 0 | DPS01 | |||
| 1 | DPS1 | = × (1 + ) | ||
| 2 | DPS2 | = × (1 + ) | ||
| 3 | DPS3 | = × (1 + ) | ||
| 4 | DPS4 | = × (1 + ) | ||
| 5 | DPS5 | = × (1 + ) | ||
| 5 | Terminal value (TV5) | = × (1 + ) ÷ ( – ) | ||
| Intrinsic value of AutoZone Inc. common stock (per share) | ||||
| Current share price | ||||
Based on: 10-K (reporting date: 2023-08-26).
1 DPS0 = Sum of the last year dividends per share of AutoZone Inc. common stock. See details »
Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.
Required Rate of Return (r)
| Assumptions | ||
| Rate of return on LT Treasury Composite1 | RF | |
| Expected rate of return on market portfolio2 | E(RM) | |
| Systematic risk of AutoZone Inc. common stock | βAZO | |
| Required rate of return on AutoZone Inc. common stock3 | rAZO | |
1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).
3 rAZO = RF + βAZO [E(RM) – RF]
= + [ – ]
=
Dividend Growth Rate (g)
Company does not pay dividends.