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Industry: Lodging Company: Starwood Hotels and Resorts Module 9: Valuation of Equity

Industry: Lodging Company: Starwood Hotels and Resorts Module 9: Valuation of Equity. Sarah Weatherburn. Comparable Companies . Computation of NFL. $11,802 Equity Value = $12,548 (Enterprise Value) - $746 (NFL) Estimated value per share = $11,802 / 167 million = $70.67 NYSE = $78.23.

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Industry: Lodging Company: Starwood Hotels and Resorts Module 9: Valuation of Equity

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  1. Industry: Lodging Company: Starwood Hotels and Resorts Module 9: Valuation of Equity Sarah Weatherburn

  2. Comparable Companies

  3. Computation of NFL

  4. $11,802 Equity Value = $12,548 (Enterprise Value) - $746 (NFL) Estimated value per share = $11,802 / 167 million = $70.67 NYSE = $78.23

  5. Leverage Weighted Average Cost of Capital Formula Rearrange to yield:

  6. Value Line - Analysts’ Forecasts

  7. Forecast Using Value Line

  8. Equity Valuation Using Dividend Discount Model

  9. Implied Forecasts from Valueline

  10. Concerns • Why Negative Residual Earnings? • Connected to 11% sales growth and 11.67 WACC? • Tried lower WACC (9.72) and numbers were still negative? • Why no change between 2015 & 2016? • Then extreme jump in 2017?

  11. Sensitivity Analysis • Recommendation – Hold • Believe Forecasts are Not Correct – have to recalculate • WACC may be too high at 11.67 • Sales Growth too high at 11% • Need to Review EPM & EATO

  12. Questions?

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