What Percentage of Juniper’s Stock Price Can Be Attributed To Growth?
Juniper’s stock has been rather stable over the past year, despite the uncertainty in telecom carriers’ spending. Hence, we think it’s worthwhile to figure out what portion of the company’s stock can be attributed to growth.
We know that a stock’s valuation can be highly influenced by future expectations of earnings growth. However, in theory, if a company sees no growth opportunities it should distribute all its earnings as dividends to its shareholders. The only capital expenditure required in such a case will be equal to the amount required to replace or maintain existing assets.
Mathematically, (capital expenditure + change in net working capital + change in net operating assets) = (depreciation and amortization).
- What To Expect As Juniper Publishes Its Q3 Results?
- What’s Driving The Surge In Digital Infrastructure Stocks?
- What To Expect From Juniper Networks’ Q1 Earnings?
- What’s Happening With Juniper Stock?
- Here’s How Juniper Networks Stock Strongly Outperformed The Broader Markets!
- What’s Behind Juniper Networks’ Stock’s Strong Underperformance Of The S&P Since 2017?
We assume that this amount of capital expenditure will be sufficient for the company to retain its market share and keep margins constant. In this case, if the company pays all earnings as dividends for the rest of the period, we can calculate Present Value of Growth Opportunity (PVGO) of a stock from the formula given below:
PVGO = Current Stock Price – (Forecasted Earnings for the next period / Cost of Equity)
Have more questions about Juniper? See the links below:
- What’s Juniper’s Fundamental Value Based On Expected 2016 Results?
- How Has Juniper’s Revenue Composition Change In The Last Five years?
- What’s Juniper’s Revenue & Expenses Breakdown?
Notes:
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap |More Trefis Research