Task of individual assignment
The task you have is to pick a company and value it using a variety of alternative methodologies.
You are to comment critically on the validity of the different approaches in the specific case of the company you have chosen, explaining the significance of the differences in valuation that arise.
Please choose one of the following firms:
Barratt Developments plc
Bellway plc
Bovis Homes Group plc
Crest Nicholson Holdings plc
Galliford Try plc
Persimmon plc
Redrow plc
Taylor Wimpey plc
The Berkeley Group Holdings plc
You may well choose to make use of analysts’ reports or other commercial forecasts. That is fine, but please make sure that you identify the source and appraise it critically. Could you please also produce a forecast for the company’s share price on 1 July 2017.
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Structure and Content
While it is up to you to decide how to structure the valuation, you may find the following helpful:
1.A very brief statement on why you chose the company.
2.Some industry and company background. You do not have much space, so do not do a rambling company history; what I want to know is what you see are the key competitive forces that will determine a company’s ability to generate cash flow in this sector.
3.A discounted cash flow analysis. Do not demonstrate your Excel copying skills by producing lots of years P&L when the figures are simply assumed to grow steadily; do spend time explaining what are the key ratios or growth rates and why you chose the values you did.
4.A multiples valuation, for example using price earnings ratios. You will need to discuss the companies you are using as comparators, and explain why their multiples differ, and how you fixed on a particular multiple.
5.A discounted dividend valuation.
6.A value based on the balance sheet.
7.Any other methods that occur to you if they provide additional insights into the value of the company.
8.A comparison of the different methodologies. Bring the numbers together, explaining how precise they are, why they differ from each other, and what the differences tell you about the company.
9.A forecast of where the share price will be on 1 July 2017.
Please also include your word count. I am looking for no more than 3000 words; please consult the work count information below for details. You are able to include an optional appendix with figures or tables that should be no more than three pages long (restrict these to ones that are strictly necessary to support your argument). You will be rewarded for well-presented work, where tables, charts, and appendices are clear and well laid out, and support the text.
Corporate Finance