collected by :Molly Tony
Returns requirements on the “dividend share” class would be lower and could effectively lower the business’s cost of capital.
The other class would not receive cash payouts (i.e., dividends and net buybacks) in excess of the fixed dividend share, and would essentially be a “capital appreciation” share class.
David Einhorn’s Greenlight Capital recently released a proposal that would split General Motors’ shares (NYSE:GM) into two separate classes.
This would be similar to a preferred share class or even an additional tranche of subordinated debt.
Greenlight Capital’s proposal of a dual share class – one of a fixed, perpetual-dividend variety, and another that focuses on capital appreciation – was turned down by company management.
as mentioned in
Bearish Thoughts On General Motors’ Shares – General Motors Company (NYSE:GM)
And then in January, we saw auto sales from General Motors (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) fall despite leaning substantially on incentives.
So what’s an investor in these auto shares to do, especially if you added GM or FCAU shares in early 2016?
And yes, winter storm Stella likely did a number of auto sales in March.
Currently, GM shares are trading at 5.8x 2017 earnings, which are forecasted to fall to $6.02 per share from $6.12 per share in 2016.
Over the last six months, shares of General Motors, Ford, and Fiat Chrysler are up 8 percent, -2.4 percent, and more than 70 percent, respectively.
as mentioned in In the initial period the company may have a higher growth rate and the second stage is usually assumed to have perpetual stable growth rate.
Equity Value Equity Value (Total value) = Present value of next 5 years cash flows + terminal value = $15,348 + $21,663 = $37,011The last step is to then divide the equity value by the number of shares outstanding.
The Simply Wall St app conducts a discounted cash flow for every stock on the NYSE every 6 hours.
For this growth rate I used the average annual growth rate over the past 5 years, but capped to a reasonable level.
A discounted cash flow (DCF) analysis represents the net present value (NPV) of projected cash flows to a stock.