BAD 491 – Valuing a Restaurant.

BAD 491 – Valuing a Restaurant.

Final Paper & Presentation

Watch this Video: https://www.youtube.com/watch?v=a1zGAFYAvH8

Research Question: Using the tools presented by Damodaran and financial statement videos, determine the value per share of your restaurant. Compare your answer to its

current publicly traded stock price and make a recommendation as to whether the average investor should purchase stock in this company.

The Deliverable: The paper should be written along the following guidelines

Section 1: Introduction: Read the 10k report and Value Line report for your company. Introduce the company (e.g., when it was founded, when it went public, what it

produces, brief biography of the CEO, current stock price, prognosis for the company).

Section 2: Firm Prognosis: If your 10k report includes a prognosis by the letter to the shareholder, summarize the direction of the company here. If it does not, there

is a section in the 10k report which discusses the firm’s current projects and its future goals. Evaluate the financial health of the company.

Section 3: Analyst Report: Using our Dominican library online, research the company using Morningstar, Value Line, and Mergent Online. Also research your company using

GuruFocus.com. How do analyst assess the financial health of your restaurant?

Section 4: Intrinsic Stock Price Model: You goal is to prepare a one-page document similar to the attached which highlights your Excel calculations of:
1.    Free Cash Flow
2.    Growth Rate
3.    WACC
4.    Terminal Value
Using the models presented in class and from the following videos, calculate the equity value per share for your restaurant. See the Video List to help you build this

model and the Sample Presentation list for Section 4.

Section 5: Summary Table of Equity Value: Present the following information and briefly discuss your findings:
1.    Equity value per share you calculated
2.    Current equity value per share
3.    Target equity value per share
4.    Guru Focus calculation of value per share
You may wish to include a graph of the changes in stock price over the past six months
Section 6: PE and Earnings Per Share: Present your findings using the past 3 years of financial data. Import graphs and charts into the template.
Section 7: Recommendation: Would you recommend an investor to buy or hold or sell? Defend your recommendation.
Video List:
Decoding Free Cash Flow: Using what we learned in class (along with the following videos), create an Excel file and calculate Free Cash Flow for your firm for the past

5 years. If your firm was recently listed, please use quarterly data.
1.    Aswath Damodaran Valuation Techniques:
a.    What to Extract from Financial Statements: https://www.youtube.com/watch?v=qaDFkAh3J4k
b.    Valuation: The Basics https://www.youtube.com/watch?v=FNF3ncQgABk
c.    Introduction to Valuation: https://www.youtube.com/watch?v=znmQ7oMiQrM
d.    Foundation of Intrinsic Valuation: https://www.youtube.com/watch?v=8vYQpWXQ5hE
e.    Cash Flows: https://www.youtube.com/watch?v=8gYT3Xgs6NE
f.    Growth: https://www.youtube.com/watch?v=fRNcP9xjk-8
g.    Terminal Value: https://www.youtube.com/watch?v=83yR6EFEl5Y
h.    Value Enhancement: https://www.youtube.com/watch?v=9XHtztcbbUI
i.    Loose Ends in Valuation: https://www.youtube.com/watch?v=C5ZDAEqQkvA
j.    Relative Valuations: https://www.youtube.com/watch?v=WDZwqSierZ4
k.    PE Ratios: https://www.youtube.com/watch?v=42iyR6Geqiw
2.    Example using Pepsi: https://www.youtube.com/watch?v=xiPSMorm33Q
3.    Gordon-Shapiro Model:
a.    Part I: https://www.youtube.com/watch?v=RZ2–x7M-ss
b.    Part II: https://www.youtube.com/watch?v=ImyKhiy5OX0
c.    Part III: https://www.youtube.com/watch?v=fhC1JjB3yQM
4.    Breaking into Wall Street: Calculating Free Cash Flow & Enterprise Value: https://www.youtube.com/watch?v=bkkrJJHFz2g and https://www.youtube.com/watch?

v=kYlqdoIJOqY
5.    Calculating Free Cash Flow using Radio Shack: https://www.youtube.com/watch?v=wOZvqpqGyLI

Decoding WACC:
1.    What is WACC: https://www.youtube.com/watch?v=eKFy5HuOoQo
2.    WACC, Cost of Debt, and Cost of Equity: https://www.youtube.com/watch?v=UTUVgGbX3Uk
3.    Use thatswacc.com to find your restaurant’s WACC.

Decoding Growth Rate: Already completed with a previous assignment

Decoding Net Working Capital
1.    What is Working Capital? https://www.youtube.com/watch?v=2yrI2sM8LhI
2.    Working Capital using Financial Statements: https://www.youtube.com/watch?v=Kkf_eyB3sTI

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