Martins, José Carlos TudelaAraújo, Henrique Ivens Ferraz Pessoa de2015-09-152015-07-062015http://hdl.handle.net/10400.14/18242We examine whether Heineken’s stock, as of 31 December 2014, is over- or under-valued. We start by studying the most commonly used valuation models, and concluded that the preferred for Heineken is the WACC-based DCF, with the values triangulated by a relative valuation. It was also found that the company has been adapting itself to the industry changes, and believing in the expected future growth in some markets, our main valuation model returned a target share price of €79,91. The discrepancy between the implicit value and the market price at the valuation date (€58,95) led us to recommend a long-position on Heineken’s stock. The effect of variations in key inputs was also tested and our findings were that small variations in the WACC and perpetuity growth rates are followed by significant changes on our DCF’s implicit price. Because of the great responsiveness of the model to the discount rate, and also due to the way the valuation models were structured, we reached an output different from a J.P. Morgan’s equity research.engmaster thesis201170655