Contents - Index

Inputs:  Abnormal Earnings Growth Model
©2009 OS Financial Trading System



In the FTS Real Time Client the bottom RHS of the screen lets you select the analytical support from what is available.  In this exercise we are using "Stocks:  FCFE Model:  2 Stage" so select this support from the yellow part of the screen below.


The bottom RHS will now appear as follows.  It has the main inputs from the exercise to date as well as derived values from this model.  The derived values will let you make additional inferences from the current market price.


In particular the following fields are available:
RE_BV (Book Value)
RE_D (Current Dividend)
RE_D1 (Next year's dividend)
RE_EPS (Current EPS)
RE_EPS1 (Next year's EPS)
RE_EPS2 (Following year's EPS)
RE_Y1 (Number of years in abnormal growth stage)
RE_G1 (Abnormal growth --- e.g., 5-year abnormal growth)
RE_G2 (Normal Growth)
RE_Ke1 (Cost of Equity Capital abnormal growth phase)
RE_Ke2 (Cost of Equity Capital normal growth phase)
RE_PR (Payout Ratio)

In addition the derived fields are:
Market Price - Current spot stock price
PV Abnormal Earnings --- PV of residual earnings in abnormal growth phase
PV Continuing Value - PV of residual earnings in normal growth phase
Intrinsic Value (sum of PV Abnormal + PV Continuing Value + Book Value)
Premium over Book --- Value of future residual earnings stream
Over/Under --- market price relative to intrinsic value
Current Summary of Key Inputs:
Book Value per Share = Total Stockholders' Equity/(Shares issued - Treasury Stock) = 13,465/(2,096.981860 - 757.885937) = $10.055 equals the book value per share.
Dividend per Share = Dividends/(Shares issued - Treasury Stock) = 2,585/(2,096.981860 - 757.885937) = $1.9305 equals the dividend per share.
Dividend Payout Ratio = 2585/12,334 = 0.2095
Comprehensive Earnings Per Share = Net Income / (Shares issued - Treasury Stock) = 5,862/(2,096.981860 - 757.885937) = $4.37758
Comprehensive EPS FY 2009  $4.377*1.0175 = $4.454, Growth 0.0175
Comprehensive EPS FY 2010  $4.454*1.089 = $4.85, Growth 0.089
5-Year  Growth = 0.0965
Normal Growth = 0.045
Projected Dividend Per Share (Next Year) = $9.37*0.2095 = $1.96
Years in Abnormal Growth Stage 1:  5-years
Cost of Equity Capital for both Abnormal and Normal Growth Stages = 0.08165
The remaining fields are derived fields.