Good afternoon Readers,
Attached is the updated valuation for CVS. Last week, the Senate passed the COVID bill. I have not read the bill. From the articles I read, and the I estimations I made to tie the valuation into the market, my best guess is that the provision to reverse the minimum wage decision from last month is unlikely to take effect. This makes it more likely interest rates will need to increase. Historically wage growth has been one of the main drivers of inflationary pressure.
I updated the model to continue to work on an equation to standardize the cost of equity equation being thrown off by COVID. The adjustments include a Beta premium on the stock, and a reduction in the expected return of the market.
As a reference, please see the below charts from, • U.S. - projected inflation rate 2008-2024 | Statista
Warmest Regards,