Friday 5 May 2017

Valuation of Sainsbury

In 2005/06 we raised more than ? 3. 2m for charity in its stores. This included ? 270,000 for Home-Start, a charity helping families with young children, and more than ? 330,000 through the charity donation boxes in stores. Sainsbury’s has supported Comic Relief’s Red Nose Day since 1999. In June 2005 it committed to working with Comic Relief for a further seven years, as its sole retail partner until 2011. It also committed for the first time to working with Sport Relief, set up by Comic Relief in association with BBC Sport, also until 2011.

Sainsbury's Online

There are 7,229508 outstanding, which implies that the value per share is given by 52,902,250/7,229508  = 7. 3175 = 731. 75p. The current share price is 473. 75p while the value calculated here is 731. 75p. This means that the stock is undervalued; it is therefore consistent with a buy or hold decision. In addition, the company is earning above its cost of equity capital. It’s return on equity (ROE) is 16. 7% while its cost of capital is 13. 7% the company therefore earns a return of 3% above its equity cost of capital.