Foot Locker / Hist.Data / Zero Real Growth
Share Buyback vs. Dividend using Terminal Values (Model SB‑DIV‑TV)
@SimSim 4 months ago 20 Views
This model simulates the gain/loss to long-term shareholders from making a single share buyback, compared to making a dividend payout for the same amount of money. All future earnings are assumed to be paid out as dividends.
Share-prices are NOT simulated. 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 instead, then you should use another model.
The capital gains tax is irrelevant because this model does not simulate future share-prices. And the dividend tax is also ignored, because it cancels out in the valuation formulas.
Keywords: DEMO FL
- Earnings = Sales (2021-2023) x Net Profit Margin (2004-2023).
- Zero real growth.
- Discount rate from historical S&P 500 5-7 year REAL avg. ann. returns (1971-2017) + 5% risk-premium.
- This plot shows the probability distributions for the discount rate and terminal growth-rate.
- This plot shows the probability distributions for the Earnings in future years.
- This histogram shows the Return on Intrinsic Value (ROIV), when making a share buyback for USD 100m at the current share-price of USD 26.
- Out of 500k simulation trials 94% had valid results. Outliers >10.0 IQR are removed.
- ROIV is invalid when the intrinsic value is zero or negative. ROB also works in those cases.
- The red box at the bottom shows the probability of loss, if a share buyback is made now at the current share-price of USD 26.
- This histogram shows the Return on Buyback (ROB), when making a share buyback for USD 100m at the current share-price of USD 26.
- Out of 500k simulation trials 100% had valid results. Outliers >10.0 IQR are removed.
- The red box at the bottom shows the probability of loss, if a share buyback is made now at the current share-price of USD 26.
- This 2D histogram shows how different share-prices at the time of the share buyback, would impact the Return on Intrinsic Value (ROIV), when making a share buyback for USD 100m.
- Out of 500k simulation trials 95% had valid results. Outliers >10.0 IQR are removed.
- ROIV is invalid when the intrinsic value is zero or negative. ROB also works in those cases.
- The x-axis shows a range of share-prices around the current share-price of USD 26, which is marked as a dashed blue line.
- The red box at the bottom shows the probability of loss, if a share buyback is made now at the current share-price of USD 26.
- This 2D histogram shows how different share-prices at the time of the share buyback, would impact the Return on Buyback (ROB), when making a share buyback for USD 100m.
- Out of 500k simulation trials 100% had valid results. Outliers >10.0 IQR are removed.
- The x-axis shows a range of share-prices around the current share-price of USD 26, which is marked as a dashed blue line.
- The red box at the bottom shows the probability of loss, if a share buyback is made now at the current share-price of USD 26.
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