What Percentage Of Ralph Lauren’s Stock Price Can Be Attributed To Growth?
In this analysis, we quantify the percentage of Ralph Lauren’s (NYSE:RL) stock that can be attributed to growth.
We know that a stock’s valuation can be highly influenced by expectations of future 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).
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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 the 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 on Ralph Lauren? See the links below:
- Ralph Lauren Q4 And FY 2016 Earnings And Revenue Beat Expectations
- Why Have Ralph Lauren’s Licensing Revenues Been Declining In Recent Years?
- How Have The Number Of Ralph Lauren Stores Operated By The Company Changed Over The Past Five Years?
- Why Is The Online Market Place The Next Big Thing For Ralph Lauren?
- How Has Ralph Lauren Performed In Comparison To Its Peers?
- How Has Ralph Lauren’s Sales Breakdown According To Geographic Locations Changed Over The Past Five Years?
- How Will Ralph Lauren’s Retail Division Perform In The Next Five Years?
- How Did Just The Month Of February Make Ralph Lauren One Of The Worst Performing Companies, Amongst Its Peers?
- Why Did We Revise Our Price Estimate Of Ralph Lauren To $102?
- How Will Ralph Lauren’s Revenue And EBITDA Composition Change In The Next 3 Years?
- How Has Ralph Lauren’s Revenue And EBITDA Composition Changed In The Last 5 Years?
- By What Percentage Did Ralph Lauren’s Revenue & EBITDA Grow In The Last 5 Years?
- What Is Ralph Lauren’s Fundamental Value Based On Expected 2016 Results?
- What Is Ralph Lauren’s Revenue And EBITDA Breakdown?
- Ralph Lauren: Year 2015 In Review
Notes:
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
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