Sally Beauty Holdings / Realistic / No-Growth
Internal Rate of Return of Stock using Terminal Values (Model IRR‑STK‑TV)
@SimSim 11 months ago
This model simulates the Internal Rate of Return (IRR) of a company to long-term shareholders, where the excess cash and all future earnings are assumed to be paid out as dividends.
This model does NOT simulate future share-prices. Instead the simulated earnings for the final year are assumed to grow forever so they are used to calculate Terminal Values. If you want to simulate future share-prices, then you should use another model instead.
The IRR is the discount rate that makes the Present Value equal to the current share-price. The IRR models are somewhat finicky with regard to the user-input and cannot always find the IRR.
Keywords: DEMO SBH
- Earnings simulated from historical Net Profit Margin (2011-2023) and recent sales (2022-2023).
- Earnings lowered by USD 100m for first 4 years to repay debt.
- This plot shows the simulated Internal Rate of Return (IRR), when the current share-price is USD 10.
- 100% of 100k simulation trials had valid results. Outliers >4.0 IQR are removed.
- This plot shows how different share-prices would impact the Internal Rate of Return (IRR).
- 100% of 100k simulation trials had valid results. Outliers >4.0 IQR are removed.
- The x-axis shows a range of prices around the current share-price of USD 10, which is marked as a dashed blue line.
- The red box at the bottom shows the probability of loss if the current share-price is USD 10.