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- Giving Voice To Values
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- Economics
- Business
- Business-Government Relations
- Diversity Management and Leveraging Difference
- Entrepreneurship and Innovation
- Environment and Sustainability
- Ethics
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- Global Economies and Markets
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- Giving Voice To Values
- Decision Analysis
- Case Method
- Economics
- Business
- Business-Government Relations
- Diversity Management and Leveraging Difference
- Entrepreneurship and Innovation
- Environment and Sustainability
- Ethics
- Finance
- Accounting & Control
- Global Economies and Markets
- Leadership and Organizational Behavior
- Management Communications
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- Operations Management
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Overview
This case is used in Darden's first year Finance course, but it would be appropriate in any course introducing firm valuation. The case examines the 2012 decision by American Greetings (AG) to repurchase shares. At the time of the decision, the greeting card industry was facing an important structural shift; AG stock was trading at valuation multiples that were the lowest among its peer group. Students can build a simple model of the company's future cash flows and derive an implied value. Because the company is arguably in a state of maturity or decline, a discussion of steady-state economics is particularly germane.
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Learning Objectives
Learning Objectives
? Introduce firm valuation techniques based on a simple discounted cash flow (DCF) model or market multiples. ? Stimulate an appreciation for terminal value assumptions and their impact on firm valuation. ? Build intuition on the relationships among firm growth, operating profitability, and value creation. ? Discuss shareholder distribution policy theory and practice with regard to share repurchases and dividends.