You're a financial advisor and one of your clients comes to you for advice. He wants to invest in company XYZ. What would be your first steps in order to help your client?
After taking those required steps you investigate the financial data, you find out that the current stock price is at $47.50. The company has grown at an average of 12.2% for the past 10 years. The current rate of inflation is 3% and the current 30-year bond yield is 2%. The most recent information from the 2015 Statement of Cash Flows, indicates a -$4.1 Billion in capital expenditures, $7 Billion in cash from operation activities and $700 Million from investing activities, $500 Million dividends paid and there are 1 Billion shares outstanding. Using the DCF valuation method, what would you recommend to your client and why?