What is the value of the company? The valuation case of Magazine Luiza
DOI:
https://doi.org/10.21680/2176-9036.2021v13n1ID19563Keywords:
Valuation; Magazine Luiza; Discounted cash flow; Relative Evaluation.Abstract
Purpose: Magazine Luiza, founded in November 1957, is a national retail icon, went public in 2011 at B3, with exponential growth in the valuation of its shares. This case provides the following pedagogical objectives: a) promote problem analysis, propose and inquire about valuation decisions; b) stimulate reflection between the theory that supports the purposes of evaluation and the way it should be developed and applied; c) expand the ability to relate the theoretical assumptions of valuation and their adequacy to reality.
Methodology: The Financial Statements were extracted from the website of the company, on Economática® and on the website of B3. Professor Damodaran's database was also used. It should be noted that the data are real, however, on the other hand, the existence of the company Alpha Varejo and its proposed acquisition of the company Magazine Luiza are considered as a hypothetical situation.
Results: From a behavioral perspective, it allows students and teachers to have healthy dialogues and discussions so that there is mutual respect for divergent opinions and ideas, allowing the exposure of their points of view. Estimating the value of the company using the Discounted Cash Flow and Relative Valuation methods is a complex task, and can be considered as an important decision-making process, especially for the company's shareholder. In the use of methods, there is the need to choose appropriate premises that best reflect the reality of the company.
Contributions of the Study: The performance of the proposed activity, with undergraduate or graduate students in the business area in disciplines aimed at analyzing the financial viability of companies and valuation, contributes to the training of these students with the development of critical analysis and stimulating discussion in the financial studies.
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