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Nestl é Module 5: Valuation Using Forecasts of Cash Flows

Nestl é Module 5: Valuation Using Forecasts of Cash Flows. Dan Finan. Coffee Production Industry. Overview of Nestle. Six reportable segments: Zone Europe Zone Americas Zone Asia, Oceania and Africa Nestle Waters Nestle Nutrition Other Food and Beverages. Overview of Nestle.

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Nestl é Module 5: Valuation Using Forecasts of Cash Flows

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  1. NestléModule 5: Valuation Using Forecasts of Cash Flows Dan Finan

  2. Coffee Production Industry

  3. Overview of Nestle • Six reportable segments: • Zone Europe • Zone Americas • Zone Asia, Oceania and Africa • Nestle Waters • Nestle Nutrition • Other Food and Beverages

  4. Overview of Nestle • Products are categorized under: • Powdered and Liquid Beverages • Milk Products and Ice cream • Prepared Dishes and Cooking Aids • Confectionery • Pet Care • Water • Pharmaceuticals • Nutrition

  5. Nestle Monthly Share Prices … January 2009 – December 2013

  6. Monthly 30-Year Treasury Yields … January 2009 – December 2013

  7. Monthly 30-Year Treasury Yields I will use 3.69% for rf(return as of 2/11/14).

  8. Monthly S&P 500 Returns … January 2009 – December 2013

  9. Regression Analysis(between Nestle share price and S&P returns)

  10. Regression Analysis(between Nestle share price and S&P returns)

  11. Cost of Equity CapitalUsing both Adjusted and Unadjusted Beta Values

  12. After-tax Cost of Debt

  13. Enterprise Cost of CapitalUsing both Adjusted and Unadjusted Beta Values

  14. Beta Values from Other Sources

  15. Beta Values from Other Sources Using adjusted Beta produces WACC closer to Bloomberg’s calculation. Using unadjusted Beta produces WACC closer to the aggregate of other sources’ calculations.

  16. DCF Model using Bloomberg’s WACC(from Module 5)

  17. DCF Model using WACC--Adjusted β

  18. DCF Model using WACC--Unadjusted β(similar to Other Sources’ Calculations)

  19. DCF Model using Other Beta Values

  20. Questions?

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