Group Assignment: Mini Case Stock Valuation

Manajemen Keuangan Berbasis Digital

Dosen Pengampu : Dr. Sri Hasnawati, S.E., M.E.

Disusun oleh
Kelompok L

Fathur Rahman 2221011026

Nabilla Distaricca A 2221011033
Nabila Nur Aziza 2221011020
Rizaldi Ramadhan 2221011024

PROGRAM STUDI MAGISTER MANAJEMEN

FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS LAMPUNG
2022
MINI CASE STOCK VALUATION

Larissa has been talking with the company’s directors about the future of East Coast
Yachts. To this point, the company has used outside suppliers for various key
components of the company’s yachts, including engines. Larissa has decided that
East Coast Yachts should consider the purchase of an engine manufacturer to allow
East Coast Yachts to better integrate its supply chain and get more control over
engine features. After investigating several possible companies, Larissa feels that
the purchase of Ragan Engines, Inc., is a possibility. She has asked Dan Ervin to
analyze Ragan’s value.

Ragan Engines, Inc., was founded nine years ago by a brother and sister—
Carrington and Genevieve Ragan—and has remained a privately owned company.
The company manufactures marine engines for a variety of applications. Ragan has
experienced rapid growth because of a proprietary technology that increases the
fuel efficiency of its engines with very little sacrifice in performance. The company
is equally owned by Carrington and Genevieve. The original agreement between
the siblings gave each 150,000 shares of stock.

Larissa has asked Dan to determine a value per share of Ragan stock. To accomplish
this, Dan has gathered the following information about some of Ragan’s
competitors that are publicly traded:

Nautilus Marine Engines’s negative earnings per share (EPS) were the result of an
accounting write- off last year. Without the write-off, EPS for the company would
have been $1.97. Last year, Ragan had an EPS of $5.08 and paid a dividend to
Carrington and Genevieve of $320,000 each. The company also had a return on
equity of 25 percent. Larissa tells Dan that a required return for Ragan of 20 percent
is appropriate.

1. Assuming the company continues its current growth rate, what is the value per
share of the company’s stock?

2. Dan has examined the company’s financial statements, as well as examining

those of its competitors. Although Ragan currently has a technological advantage,
Dan’s research indicates that Ragan’s competitors are investigating other methods
to improve efficiency. Given this, Dan believes that Ragan’s technological
advantage will last only for the next five years. After that period, the company’s
growth will likely slow to the industry average. Additionally, Dan believes that the
required return the company uses is too high. He believes the industry average

1
required return is more appropriate. Under Dan’s assumptions, what is the estimatedstock
price?

3. What is the industry average price–earnings ratio? What is Ragan’s price– earnings
ratio? Comment on any differences and explain why they may exist.

4. Assume the company’s growth rate declines to the industry average after five years.
What percentage of the stock’s value is attributable to growth opportunities?

5. Assume the company’s growth rate slows to the industry average in five years.
What future return on equity does this imply?

6. Carrington and Genevieve are not sure if they should sell the company. If they do
not sell the company outright to East Coast Yachts, they would like to try and increase
the value of the company’s stock. In this case, they want to retain control of the
company and do not want to sell stock to outside investors. They also feel that the
company’s debt is at a manageable level and do not want to borrow more money. What
steps can they take to try and increase the price of the stock? Are there any conditions
under which this strategy would not increase the stock price?

2
1. Diketahui:
Ragan Engines, Inc.
 EPS = $5,08
 R = 20%
 Saham = 300.000 Lembar
 Dividen= $640.000
Industry :

Growth = ROE (1-DPR)

= 25% (1-0,4199)
= 25% x 0,5801
Growth = 0,1450 = 14,5%
EPS = Laba Bersih : Lembar Saham
5,08 = Laba Bersih : 300.000
Laba = 5,08 x 300.000
Laba Bersih = 1.524.000

DPS = Nilai Dividen : Lembar saham

= (320.000x2) : 300.000
DPS = $2,13
DPR = (DPS : EPS) x 100%
= (2,13 : 5,08) x 100%
DPR = 41,99%

3
Jawab:
V1 = D1 : (r-g)
V1 = Nilai Intrinsik tahun ke-
1D1 = DPS
r = expected returns
g = expected growth

= (2,13 x (1+g)) : (20% - 14,5%)

= (2,13 x 1,145) : (0,20 – 0,145)
= 2,439 : 0,055 = $44,34

Required rate of return (average) = 17.00%

EPS (average) = (1.09+1.26+1.97)/3 = 1.44
Retention ratio (average) = 1-(DPS/EPS) = 1-(0.41/1.44) = 0.7153

ROE (average) = 13.00%

g (average) = ROE*RR = 0.13*0.7153 = 0.0930

g1 = 0.1450 ~ 14.50%
g2 = 0.0930 ~ 9.30%

Expected dividend [DPS*(1+g)]

D1 = 2.1333 = 2.1333
D2 = 2.1333*1.1450 = 2.4426
D3 = 2.1333*1.14502 = 2.7968
D4 = 2.1333*1.14503 = 3.2023
D5 = 2.1333*1.14504 = 3.6667

Terminal value at year 5 = (3.6667*1.0930)/(0.17-0.0930) = 52.0480

Current value of share

=
(2.1333/1.17)+(2.4426/1.172)+(2.7968/1.173)+(3.2023/1.174)+(3.6667/1.175)+(52.0480/1.1
75)
= 32.4747

4
2. Required rate of return (average) = 17.00%
EPS (average) = (1.09+1.26+1.97)/3 = 1.44
Retention ratio (average) = 1-(DPS/EPS) = 1-(0.41/1.44) = 0.7153

ROE (average) = 13.00%

g (average) = ROE*RR = 0.13*0.7153 = 0.0930

g1 = 0.1450 ~ 14.50%
g2 = 0.0930 ~ 9.30%

Expected dividend [DPS*(1+g)]

D1 = 2.1333 = 2.1333
D2 = 2.1333*1.1450 = 2.4426
D3 = 2.1333*1.14502 = 2.7968
D4 = 2.1333*1.14503 = 3.2023
D5 = 2.1333*1.14504 = 3.6667

Terminal value at year 5 = (3.6667*1.0930)/(0.17-0.0930) = 52.0480

Current value of share

=
(2.1333/1.17)+(2.4426/1.172)+(2.7968/1.173)+(3.2023/1.174)+(3.6667/1.175)+(52.0480/1.1
75)
= 32.4747

3. Industry Average PER = Price

EPS
= 16,91
1,41
= 11,99
Ragan PER = Price
EPS
= 44,34
5,08
= 8,728
Penjelasan: Rasio PER diatas menunjukan Ragan lebih menarik untuk menjadi pilihan
investasi. PER Ragan berada dibawah industri yang berarti harga saham Ragan relatif lebih
MURAH.
5
Perbedaan PER Ragan yang berada dibawah industri disebabkan oleh kinerja keuangan
(Laba) yang tinggi karena pertumbuhan bisnis yang baik didorong oleh penguasaan teknologi
eksklusif yang meningkatkan efisiensi bahan bakar mesin.

4. Total earnings = EPS x Jumlah saham beredar

= $ 5,08 x 300.000
= $ 1.524.000
Cash cow value of Ragan = Total Earning
R Industry
= 1.524.000
0,17

6
 = $ 8.964.705,8
Total stock value =
11.433.923,5

Menghitung % earning yang tidak didistribusikan pada margin pertumbuhan:

= Cash cow value
of Ragan
Total stock
value
= 8.964.705,8
11.433.923,5
= 0,784 = 78,4%
Sehingga, % earning yang dapat didistribusikan pada margin pertumbuhan
sebesar:
= 1 – 0,784
= 0,2159 = 21,59%

5. Growth = ROE (1-DPR)

ROE = Growth(1-DPR)
= 0,092
0,5801
ROE = 0,1585 =15,85%

6.
a) Carrington dan Genevieve harus fokus pada peningkatan kinerja Ragan
dimasa yang akandatang dengan memperhatikan profitabilitas/ EPS Ragan.
b) Hal lain yang harus dilakukan adalah dengan menyiapkan investasi strategis
untuk mempertahankan keunggulan ekslusif yang berpengaruh pada kinerja
dimasa yang akan datang.
c) Untuk menghindari penambahan hutang baru, Carrington dan Genevieve
dapatmenggunakan laba ditahan dengan mengendalikan DPR sebagai sumber
pengembangan Ragan
d) Hal yang mungkin menyebabkan strategi ini tidak berdampak pada
peningkatan harga saham antara lain namun tidak terbatas pada;
Fundamental kinerja perusahaan, Kondisi Makro Ekonomi, dan agresifitas
pesaing.