Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN: 9781285867977
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 1TCL

Estimating Exxon Mobil Corporation's Intrinsic Stock Value

Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions.

In this chapter, we described the various factors that influence stock prices and the approaches that analysts use to estimate a stock's intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices for in excess of their intrinsic value may be good stocks to avoid or sell. Although estimating a stock's intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the Internet to find financial data in order to arrive at a quick "back-of-the- envelope" calculation of intrinsic value.

1. For purposes of this exercise, let's take a closer look at the stuck of Exxon Mobil Corporation (XOM). Use websites such as Yahoo! Finance, Google Finance, MSN Money (www.msn.com/en-us/money/markets). and Morningstar to find the company's current stock price and see its performance relative to the overall market in recent months. What is Exxon Mobil’s current stock price? How has the stock performed relative to the market over the past few months?

Chapter 9, Problem 1TCL, Estimating Exxon Mobil Corporation's Intrinsic Stock Value Use online resources to work on this

Previous Close 73.60
Open 74.35
Bid 74.25 X 100
Ask 74.60 X 500
Day's Range 74.10-75.00
52 Week Range 73.53 - 89.30
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Chapter 9 Solutions

Fundamentals of Financial Management (MindTap Course List)

Ch. 9 - Discuss the similarities and differences between...Ch. 9 - This chapter discusses the discounted dividend and...Ch. 9 - DPS CALCULATION Warr Corporation just paid a...Ch. 9 - CONSTANT GROWTH VALUATION Thomas Brothers is...Ch. 9 - CONSTANT GROWTH VALUATION Harmon Clothiers stock...Ch. 9 - NONCONSTANT GROWTH VALUATION Hart Enterprises...Ch. 9 - CORPORATE VALUATION Smith Technologies is expected...Ch. 9 - PREFERRED STOCK VALUATION Fee Founders has...Ch. 9 - Prob. 7PCh. 9 - PREFERRED STOCK VALUATION Ezzell Corporation...Ch. 9 - PREFERRED STOCK RETURNS Bruner Aeronautics has...Ch. 9 - VALUATION OF A DECLINING GROWTH STOCK Martell...Ch. 9 - VALUATION Of A CONSTANT GROWTH STOCK A stock is...Ch. 9 - VALUATION OF A CONSTANT GROWTH STOCK Investors...Ch. 9 - CONSTANT GROWTH You are considering an investment...Ch. 9 - NONCONSTANT GROWTH Microtech Corporation is...Ch. 9 - CORPORATE VALUATION Dozier Corporation is a...Ch. 9 - NONCONSTANT GROWTH Milts Cosmetics Co.s stock...Ch. 9 - CONSTANT GROWTH Your broker offers to sell you...Ch. 9 - NONCONSTANT GROWTH STOCK VALUATION Taussig...Ch. 9 - CORPORATE VALUATION Barrett Industries Invests a...Ch. 9 - CORPORATE VALUE MODEL Assume that today is...Ch. 9 - NONCONSTANT GROWTH Assume that it is now January...Ch. 9 - Comprehensive/Spreadsheet Problem NONCONSTANT...Ch. 9 - Prob. 23ICCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 2TCLCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 4TCLCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 6TCLCh. 9 - Prob. 7TCLCh. 9 - Prob. 8TCLCh. 9 - Prob. 9TCLCh. 9 - Prob. 10TCL
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  • Estimating Exxon Mobil Corporation's Intrinsic Stock Value Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. In this chapter, we described the various factors that influence stock prices and the approaches that analysts use to estimate a stocks intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices far in excess of their intrinsic value may be good stocks to avoid or sell Although estimating a stock's intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the Internet to find financial data in order to arrive at a quick "back-of-the- envelope" calculation of intrinsic value. 5. To put the firm's current P/E ratio in perspective, it is useful to compare this ratio with that of other companies in the same industry. To see how XOMs P/E ratio stacks up to its peers, refer to Google Finance's Related Companies screen. (If you click "Add or remove columns, you will find that you can obtain comparisons of a number of key statistics for either the most recent year or quarter) For the most part, is XOM's P/E ratio above or below that of its peers? In Chapter -4, we discussed the various factors that may influence P/E ratios Can any of these factors explain why XOM's P/E ratio differs from its peers? Explain.
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