DUK Earnings Per Share Case Study

Improved Essays
There are multiple ways to value a stock and one such way is the Earnings Per Share (EPS) approach. The EPS of a given firm is the amount of annual earnings available to shareholders (common share) provided on a per share basis (Smart, Gitman, & Joehnk, 2014). The EPS for DUK is 4.09 (see appendix 2). Using this EPS and the stock price as of March 22, 2016, the P/E ratio for DUK is 19.28. This means that for every dollar invested, one would expect $19.28 in return. However, looking at P/E as a function of one day in time would not be prudent, rather an investor would have a better feel for the company if they reviewed the trailing P/E or leading P/E. In the case of DUK the P/E ratios are 19.48 and 16.40 respectively (Yahoo! Finance, …show more content…
Additionally, information was provided about DUK and its competitor NEE within the scope of DuPont analysis. Based on the information presented within this document, the recommendation would be to purchase DUK. While the P/E forward trend and the Dividends-and-Earnings methods presented differing results, DUK is still a good buy because it has historically paid dividends and provided growth each year. It is not unreasonable to assume growth will continue, however, the actual rate of growth assumed in the Dividends-and-Earnings approach maybe higher or lower than expected. In fact, many analysts will agree that the combination of good dividend growth and earnings of the past will lead to the possibility of the same in the future and thus DUK is seen as a good investment (Debbas, …show more content…
DUK has made dividend payments for 90 straight years and for an investor who is looking for dividend income, DUK’s yield of 4.3% is appealing (Bollinger, 2016). As also noted by Bollinger (2016), the stock may not be a bargain today; however, as indicated in the P/E calculation, if DUK makes its potential return of 8-10% in the future, all DUK investors who subscribe to the Dividends-and-Earnings model will be happy. Additionally, Debbas (2016) provides that electric utility stocks have performed very well thus far in 2016; but they are not trading at a

Related Documents

  • Improved Essays

    Earnings per share of common stock: Profit allocation to outstanding shares on common stock is measured by this ratio. Company G jumped from a $0.672 in 2001 to a $1.03 for the year 2012. Benchmarks for the quartile industry are 0.83/0.87/0.9. Earnings per share of common stock for Company G represent and increment above average. Earnings per Share of Common Stock represent strength for Company G. L. Price earnings ratio:…

    • 903 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    Skyworks Solutions (SWKS) delivered strong results for the fourth quarter. Skyworks delivered revenue of $880.8 million, beating the analyst estimates, and showing a growth of 23% from the previous year’s revenue of $718.2 million. The main reason behind the increased revenue is the rise in use of Skyworks products for the technology advancements within Media Services, Internet use, and Mobile connectivity. A closer look at the metrics Moving ahead, the Non-GAAP gross profit for the quarter went up to $440.1 million from $329.6 million for the fourth quarter, 2014.…

    • 486 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Avery Dennison

    • 801 Words
    • 4 Pages

    Expected return of the company (based on our valuation) is 10%. Currently, AVY P/E ratio is 23.0 and justified P/E is…

    • 801 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    Since its ASX listing the company has improved its profit position achieving its profit forecast for FY2014 of $40million. Based on a dividend ratio based on 60% to 70% of profit, the company estimated a dividend yield of 4.6 to 5.4%. This still positions the company with reserve funds for future capital investment.⇒ Dick Smith and Quickflix are both in the retail sector, as you can see on the graph here Quickflix and Dick Smith track pretty closely to each other up until March. As you can see Dick Smith’s profitability is much greater than quickflix’s, with Quickflix making a net loss for two years in a row, whereas dick smith are yet to increase. In the EPS perspective Dick Smith are at 17.8 cents, whereas Quickflix is a negative number.…

    • 805 Words
    • 4 Pages
    Decent Essays
  • Improved Essays

    Ulta Beauty Case Study

    • 1039 Words
    • 5 Pages

    Since they went public in 2007 ULTA has faced some declines in stock prices and faced management changes ULTA has maintained a steady rise in stock prices. This is a good company to invest in for the short term because they have a strong consumer base and has maintained their name in the beauty industry. As for a long term investment potential investors should keep a watch on the stock and the management systems. When this stabilizes I believe ULTA will be a strong contender for long-term as well as short-term investments. Bibliography AP News.…

    • 1039 Words
    • 5 Pages
    Improved Essays
  • Great Essays

    Costco Financial Ratios

    • 1565 Words
    • 7 Pages

    ROE declined in each of the same three years. When reviewing the DuPont component ratios, it is evident that Wal-Mart’s has higher net profit margins, lower total asset…

    • 1565 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Game Stop Ratios

    • 559 Words
    • 3 Pages

    Analysis on Game Stop Throughout this assignment, I took a deep look into a popular video gaming company called Game Stop. This task challenged me to take a look at the ratios for over the course of three years for this company. In doing so, I’ve been able to analyze the information that I have found. Now that I have created this chart, I will take a look at the ratios and see how they compare to the industry benchmarks.…

    • 559 Words
    • 3 Pages
    Improved Essays
  • Great Essays

    After a brief increase the stock once again devalued to a further 14.60 in mid-May. This volatility makes their stocks unattractive to amateur stock traders but may be considered a junk share by some investors. Experts recommend buying for the comany’s real estate holding despite lacklustre performance in the retail sector. However, other experts recommend only for long term investors since the shares often take time to rebound from lows like the company is experiencing…

    • 1602 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Case Study Graincorp

    • 1472 Words
    • 6 Pages

    Valuation Methodology In order to value Graincorp’s stock, this report used two-stage discounted cash flow (DCF) model. This model is chosen considering that Graincorp is in the mature stage, with the characteristics of paying high dividends and has a high leverage. Moreover, management stated that they are building another silos by this year, so it is assumed that Graincorp will have an increasing growth for several periods and will drop to the stable growth afterwards. Hence, the first stage of this model would be the increasing phase for 5 years and then followed by the stable growth phase.…

    • 1472 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    Although this number is not extremely low, it does show that it has a lower percentage of the profits in relation to its assets. ROE can be utilized to show how a business profits are in relation to the amount that is withheld as shareholder equity. Valued at 53.83%, Moserk is nearly double the industry average at 28.75%. This strongly shows the overall value of the shareholders and their role in the business. Although this high number is considered a strong value, it does not properly represent the entirety of the companies financial…

    • 709 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    These returns are based off a random seven-day stock period in order to determine how these two companies compare. Under Armour demonstrated a three-year return of 4.28% under the tab, Under Armour Stock Prices in W2 in cell D44. Based on this three-year return, Under Armour is performing moderately and an investor would see a return on their investment over a period of time. Nike demonstrated…

    • 1147 Words
    • 5 Pages
    Improved Essays
  • Superior Essays

    Nike Case Study Summary

    • 1659 Words
    • 7 Pages

    Those components are the current price of the stock, the latest dividend, and the expected growth rate of the dividend. To calculate Nike’s cost of equity using the DDM method we used the current price of $42.09, the latest dividend of $0.48, and a dividend growth rate of 4.66%. In order to find the dividend growth rate we used the dividends paid out in 1997 and 2000 to plug into the endpoint formula, that is how we came up with a dividend growth rate of 4.66% (Exhibit 4). When we plugged all of this information into the DDM, we came up with an estimated cost of equity of 5.86% (Exhibit…

    • 1659 Words
    • 7 Pages
    Superior Essays
  • Improved Essays

    Discount Cash Flow Model

    • 1257 Words
    • 5 Pages

    And also use the ratios on the weighted average cost of capital(WACC) and terminal growth rate is 8.3% and 0.5% respectively. Additionally, we applied for the amount of average diluted shares of 1,000m. Therefore, in the end, we use DCF model to replicate the offer price and this yields an equity value per share of £4.13. And the detailed calculations for this discounted model shows in the Appendix B. Evaluation of key…

    • 1257 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    The company manufactures golf clubs, baseball bats, basketball goals, and other similar items. Mr. Watson is quick to point out the increase in sales over the last three years as indicated in the income statement, Exhibit 1. The annual growth rate is 20 percent. A balance sheet for a similar time period is shown in Exhibit 2, and selected industry ratios are presented in Exhibit 3. Note the industry growth rate in sales is only approximately 10 percent per year.…

    • 1715 Words
    • 7 Pages
    Improved Essays
  • Decent Essays

    Investment Summary We issue a BUY recommendation on Inari Amertron Berhad (INRI) with a target price of RM4.98 using the Discounted Cash Flow (DCF) method. This offers a 20.29% of upside from its closing price of RM4.14 on 1 December 2015. Our TP of RM4.98 implies a FY16 PE of 23.13x as we believe that INRI deserved to be trading at a premium due to its stronger growth potential with various buying points such as 1) Bright Prospects of RF Segment due to higher RF content in smartphone driven by increasing adoption of LTE network [Refer to Figure 8]]2) More Potential Outsourcing Opportunities 3) Beneficiary of Strong USD which is favorable to them as a major exporter.…

    • 1444 Words
    • 6 Pages
    Decent Essays