What Percentage of UTC’s Stock Price Can Be Attributed To Growth?

June 6th, 2016 by Trefis Team
+72.55%
Upside
85.65
Market
148
Trefis
UTX: United Technologies logo
UTX
United Technologies

In this analysis, we quantify the percentage of UTC’s stock that 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. Assuming that a 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:

Screen Shot 2016-05-26 at 3.52.05 pm

Notes: For more details about the calculation for Present Value of Growth Opportunity please refer this link.

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis of UTC

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