Some years later, Vincent, an intern equity analyst at Lucky Star investment bank was asked...
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Finance
Some years later, Vincent, an intern equity analyst at Lucky Star investment bank was asked to analyze the stock of Magic Scissors. Vincent having only learned to value stocks using the Dividend Growth model was confused about how to proceed. as Lucky Star has paid NO dividends to date.
Assuming Vincent wants to use a dividend growth model, how should he proceed with this analysis?
Vincent's supervisor strongly recommended NOT to use the dividend growth model. The supervisor instead recommends that Vincent uses the Pricing Multiple approach. The explanation he gave was that Pricing Multiple avoids market sentiments, and provides the true value of a stock.
Is Vincent's supervisor correct?
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