1 / 9

Mod 8 Valuation using abnormal enterprise income growth model Panera Bread

Mod 8 Valuation using abnormal enterprise income growth model Panera Bread. Yiwen Lin. Agenda. Adverse influences on sales growth in the long-run Use of Parsimonious Forecasts of Enterprise Operations Choice of WACC

gerard
Download Presentation

Mod 8 Valuation using abnormal enterprise income growth model Panera Bread

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Mod 8 Valuation using abnormal enterprise income growth modelPanera Bread Yiwen Lin

  2. Agenda Adverse influences on sales growth in the long-run Use of Parsimonious Forecasts of Enterprise Operations Choice of WACC Intrinsic Value Calculation using Abnormal Enterprise Income Growth Model Comparison Choosing a valuation model

  3. Adverse influences on sales growth • Ontario, Canada and urban areas: little operating experience • Failure to build local awareness due to differing demographics and consumer tastes • There can be no assurance they will be successful in operating bakery-cafes profitably in new markets or further penetrating existing markets • The industry is highly competitive on a cost basis strategy and strive to have higher margins • Globalization in this industry is low and Panera is not focused on expanding internationally • U.S. economy recover and emerge from a recessional period. • Management said they received commitment to open 176 franchise-operated bakery-cafes within the next 5 years. • Therefore, Panera’s growth rate will reach a mature level by 2018, close to U.S. GDP growth rate of 3%.

  4. Use of Parsimonious Forecasts of Enterprise Operations

  5. Choice of WACC from Mod 6

  6. Abnormal Enterprise Income Growth Model

  7. DCF Model

  8. REI Model

  9. Choosing a Valuation Model In Panera’s case, we see that using the free cash flow model over 70% of the value estimate is based on estimation beyond the forecast horizon. For the residual enterprise income valuation model, continuing value provides 63% of our value estimate. For abnormal enterprise income growth model, we see that only 20.15% of the valuation came from the periods beyond the horizon, which is the lowest reliance on continuing value. Thus, it is more reliable.

More Related