Case Exhibits

1. Question 2 Analyze Wal-Mart’s historical earnings growth, dividend growth, and dividend payout ratio. What long- term trends emerge? How would you interpret them? (Hint: It might help to provide some graphs) Question 3 Using the simplest DDM – the perpetual dividend growth model – provide an initial valuation of Wal-Mart. Please be specific about your assumptions.
   1. a) What share price to you estimate and how does it compare to current market values?
   2. b) Discuss how sensitive your model is to the assumptions you have made (provide a sensitivity analysis).
   3. c) Based on your findings in part a) and b) would you recommend buying shares in Wal-Mart based on your model?
2. a) What share price to you estimate and how does it compare to current market values?
3. b) What assumption would you have to make about the long-term growth rate for the stock price to equal the analyst consensus price?
4. c) Provide a scenario analysis of your estimates. Specifically, compute the share price under the following nine scenarios:

Initial Growth of EPS
Long-Term Growth	IG-2%	Initial Assumption (IG)	IG+2%
G-1%
Initial Assumption (G)
G+1%

2

Question 5

Value Wal-Mart using a market multiple approach based on the information given in the case. Be careful to justify your choice of model as well as some of the assumptions you will make.

Question 6

Take a very careful look at the case exhibits. Do you think Sabrina Gupta’s use of DDM models is advisable? If not, what alternative(s) would you suggest?