Stock Analysis on Net
Stock Analysis on Net

Edwards Lifesciences Corp. (NYSE:EW)

This company has been moved to the archive! The financial data has not been updated since February 14, 2022.

Capital Asset Pricing Model (CAPM)

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Edwards Lifesciences Corp. common stock.

Rates of Return

Edwards Lifesciences Corp., monthly rates of return

Microsoft Excel
Edwards Lifesciences Corp. (EW) Standard & Poor’s 500 (S&P 500)
t Date PriceEW,t1 DividendEW,t1 REW,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2017 $32.08 2,278.87
1. Feb 28, 2017 $31.35 -2.28% 2,363.64 3.72%
2. Mar 31, 2017 $31.36 0.03% 2,362.72 -0.04%
3. Apr 30, 2017 $36.56 16.58% 2,384.20 0.91%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2021 $107.31 -10.44% 4,567.00 -0.83%
59. Dec 31, 2021 $129.55 20.73% 4,766.18 4.36%
Average (R): 2.75% 1.36%
Standard deviation: 8.69% 4.48%
Edwards Lifesciences Corp. (EW) Standard & Poor’s 500 (S&P 500)
t Date PriceEW,t1 DividendEW,t1 REW,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2017 $32.08 2,278.87
1. Feb 28, 2017 $31.35 -2.28% 2,363.64 3.72%
2. Mar 31, 2017 $31.36 0.03% 2,362.72 -0.04%
3. Apr 30, 2017 $36.56 16.58% 2,384.20 0.91%
4. May 31, 2017 $38.36 4.92% 2,411.80 1.16%
5. Jun 30, 2017 $39.41 2.74% 2,423.41 0.48%
6. Jul 31, 2017 $38.39 -2.59% 2,470.30 1.93%
7. Aug 31, 2017 $37.89 -1.30% 2,471.65 0.05%
8. Sep 30, 2017 $36.44 -3.83% 2,519.36 1.93%
9. Oct 31, 2017 $34.08 -6.48% 2,575.26 2.22%
10. Nov 30, 2017 $39.07 14.64% 2,647.58 2.81%
11. Dec 31, 2017 $37.57 -3.84% 2,673.61 0.98%
12. Jan 31, 2018 $42.19 12.30% 2,823.81 5.62%
13. Feb 28, 2018 $44.56 5.62% 2,713.83 -3.89%
14. Mar 31, 2018 $46.51 4.38% 2,640.87 -2.69%
15. Apr 30, 2018 $42.45 -8.73% 2,648.05 0.27%
16. May 31, 2018 $45.77 7.82% 2,705.27 2.16%
17. Jun 30, 2018 $48.52 6.01% 2,718.37 0.48%
18. Jul 31, 2018 $47.48 -2.14% 2,816.29 3.60%
19. Aug 31, 2018 $48.08 1.26% 2,901.52 3.03%
20. Sep 30, 2018 $58.03 20.69% 2,913.98 0.43%
21. Oct 31, 2018 $49.20 -15.22% 2,711.74 -6.94%
22. Nov 30, 2018 $54.00 9.76% 2,760.17 1.79%
23. Dec 31, 2018 $51.06 -5.44% 2,506.85 -9.18%
24. Jan 31, 2019 $56.81 11.26% 2,704.10 7.87%
25. Feb 28, 2019 $56.43 -0.67% 2,784.49 2.97%
26. Mar 31, 2019 $63.78 13.02% 2,834.40 1.79%
27. Apr 30, 2019 $58.69 -7.98% 2,945.83 3.93%
28. May 31, 2019 $56.90 -3.05% 2,752.06 -6.58%
29. Jun 30, 2019 $61.58 8.22% 2,941.76 6.89%
30. Jul 31, 2019 $70.95 15.22% 2,980.38 1.31%
31. Aug 31, 2019 $73.95 4.23% 2,926.46 -1.81%
32. Sep 30, 2019 $73.30 -0.88% 2,976.74 1.72%
33. Oct 31, 2019 $79.46 8.40% 3,037.56 2.04%
34. Nov 30, 2019 $81.65 2.76% 3,140.98 3.40%
35. Dec 31, 2019 $77.76 -4.76% 3,230.78 2.86%
36. Jan 31, 2020 $73.29 -5.75% 3,225.52 -0.16%
37. Feb 29, 2020 $68.28 -6.84% 2,954.22 -8.41%
38. Mar 31, 2020 $62.87 -7.92% 2,584.59 -12.51%
39. Apr 30, 2020 $72.50 15.32% 2,912.43 12.68%
40. May 31, 2020 $74.91 3.32% 3,044.31 4.53%
41. Jun 30, 2020 $69.11 -7.74% 3,100.29 1.84%
42. Jul 31, 2020 $78.41 13.46% 3,271.12 5.51%
43. Aug 31, 2020 $85.84 9.48% 3,500.31 7.01%
44. Sep 30, 2020 $79.82 -7.01% 3,363.00 -3.92%
45. Oct 31, 2020 $71.69 -10.19% 3,269.96 -2.77%
46. Nov 30, 2020 $83.89 17.02% 3,621.63 10.75%
47. Dec 31, 2020 $91.23 8.75% 3,756.07 3.71%
48. Jan 31, 2021 $82.58 -9.48% 3,714.24 -1.11%
49. Feb 28, 2021 $83.10 0.63% 3,811.15 2.61%
50. Mar 31, 2021 $83.64 0.65% 3,972.89 4.24%
51. Apr 30, 2021 $95.52 14.20% 4,181.17 5.24%
52. May 31, 2021 $95.90 0.40% 4,204.11 0.55%
53. Jun 30, 2021 $103.57 8.00% 4,297.50 2.22%
54. Jul 31, 2021 $112.27 8.40% 4,395.26 2.27%
55. Aug 31, 2021 $117.18 4.37% 4,522.68 2.90%
56. Sep 30, 2021 $113.21 -3.39% 4,307.54 -4.76%
57. Oct 31, 2021 $119.82 5.84% 4,605.38 6.91%
58. Nov 30, 2021 $107.31 -10.44% 4,567.00 -0.83%
59. Dec 31, 2021 $129.55 20.73% 4,766.18 4.36%
Average (R): 2.75% 1.36%
Standard deviation: 8.69% 4.48%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of EW during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

Edwards Lifesciences Corp., calculation of variance and covariance of returns

Microsoft Excel
t Date REW,t RS&P 500,t (REW,t–REW)2 (RS&P 500,t–RS&P 500)2 (REW,t–REW)×(RS&P 500,t–RS&P 500)
1. Feb 28, 2017 -2.28% 3.72% 25.30 5.58 -11.88
2. Mar 31, 2017 0.03% -0.04% 7.41 1.95 3.80
3. Apr 30, 2017 16.58% 0.91% 191.21 0.20 -6.21
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2021 -10.44% -0.83% 174.10 4.80 28.91
59. Dec 31, 2021 20.73% 4.36% 322.96 9.02 53.97
Total (Σ): 4,381.89 1,164.17 1,272.64
t Date REW,t RS&P 500,t (REW,t–REW)2 (RS&P 500,t–RS&P 500)2 (REW,t–REW)×(RS&P 500,t–RS&P 500)
1. Feb 28, 2017 -2.28% 3.72% 25.30 5.58 -11.88
2. Mar 31, 2017 0.03% -0.04% 7.41 1.95 3.80
3. Apr 30, 2017 16.58% 0.91% 191.21 0.20 -6.21
4. May 31, 2017 4.92% 1.16% 4.71 0.04 -0.43
5. Jun 30, 2017 2.74% 0.48% 0.00 0.77 0.01
6. Jul 31, 2017 -2.59% 1.93% 28.54 0.33 -3.08
7. Aug 31, 2017 -1.30% 0.05% 16.45 1.70 5.29
8. Sep 30, 2017 -3.83% 1.93% 43.31 0.33 -3.77
9. Oct 31, 2017 -6.48% 2.22% 85.20 0.74 -7.95
10. Nov 30, 2017 14.64% 2.81% 141.33 2.10 17.24
11. Dec 31, 2017 -3.84% 0.98% 43.47 0.14 2.47
12. Jan 31, 2018 12.30% 5.62% 91.07 18.15 40.65
13. Feb 28, 2018 5.62% -3.89% 8.20 27.59 -15.04
14. Mar 31, 2018 4.38% -2.69% 2.63 16.37 -6.56
15. Apr 30, 2018 -8.73% 0.27% 131.86 1.18 12.47
16. May 31, 2018 7.82% 2.16% 25.68 0.64 4.07
17. Jun 30, 2018 6.01% 0.48% 10.59 0.76 -2.84
18. Jul 31, 2018 -2.14% 3.60% 23.98 5.04 -10.99
19. Aug 31, 2018 1.26% 3.03% 2.22 2.78 -2.49
20. Sep 30, 2018 20.69% 0.43% 321.87 0.86 -16.66
21. Oct 31, 2018 -15.22% -6.94% 322.93 68.86 149.12
22. Nov 30, 2018 9.76% 1.79% 49.03 0.18 3.00
23. Dec 31, 2018 -5.44% -9.18% 67.21 111.00 86.37
24. Jan 31, 2019 11.26% 7.87% 72.38 42.39 55.39
25. Feb 28, 2019 -0.67% 2.97% 11.72 2.61 -5.53
26. Mar 31, 2019 13.02% 1.79% 105.50 0.19 4.46
27. Apr 30, 2019 -7.98% 3.93% 115.23 6.62 -27.62
28. May 31, 2019 -3.05% -6.58% 33.68 62.97 46.06
29. Jun 30, 2019 8.22% 6.89% 29.93 30.64 30.28
30. Jul 31, 2019 15.22% 1.31% 155.30 0.00 -0.56
31. Aug 31, 2019 4.23% -1.81% 2.17 10.03 -4.67
32. Sep 30, 2019 -0.88% 1.72% 13.20 0.13 -1.31
33. Oct 31, 2019 8.40% 2.04% 31.92 0.47 3.87
34. Nov 30, 2019 2.76% 3.40% 0.00 4.19 0.00
35. Dec 31, 2019 -4.76% 2.86% 56.52 2.25 -11.29
36. Jan 31, 2020 -5.75% -0.16% 72.29 2.31 12.93
37. Feb 29, 2020 -6.84% -8.41% 91.96 95.43 93.68
38. Mar 31, 2020 -7.92% -12.51% 114.00 192.37 148.09
39. Apr 30, 2020 15.32% 12.68% 157.84 128.29 142.30
40. May 31, 2020 3.32% 4.53% 0.33 10.05 1.81
41. Jun 30, 2020 -7.74% 1.84% 110.18 0.23 -5.05
42. Jul 31, 2020 13.46% 5.51% 114.55 17.24 44.44
43. Aug 31, 2020 9.48% 7.01% 45.18 31.91 37.97
44. Sep 30, 2020 -7.01% -3.92% 95.39 27.89 51.58
45. Oct 31, 2020 -10.19% -2.77% 167.43 17.01 53.37
46. Nov 30, 2020 17.02% 10.75% 203.46 88.30 134.03
47. Dec 31, 2020 8.75% 3.71% 35.95 5.54 14.12
48. Jan 31, 2021 -9.48% -1.11% 149.71 6.11 30.24
49. Feb 28, 2021 0.63% 2.61% 4.51 1.57 -2.66
50. Mar 31, 2021 0.65% 4.24% 4.43 8.33 -6.07
51. Apr 30, 2021 14.20% 5.24% 131.10 15.09 44.48
52. May 31, 2021 0.40% 0.55% 5.55 0.65 1.91
53. Jun 30, 2021 8.00% 2.22% 27.50 0.75 4.53
54. Jul 31, 2021 8.40% 2.27% 31.88 0.84 5.18
55. Aug 31, 2021 4.37% 2.90% 2.62 2.38 2.50
56. Sep 30, 2021 -3.39% -4.76% 37.72 37.39 37.56
57. Oct 31, 2021 5.84% 6.91% 9.52 30.87 17.14
58. Nov 30, 2021 -10.44% -0.83% 174.10 4.80 28.91
59. Dec 31, 2021 20.73% 4.36% 322.96 9.02 53.97
Total (Σ): 4,381.89 1,164.17 1,272.64

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VarianceEW = Σ(REW,t–REW)2 ÷ (59 – 1)
= 4,381.89 ÷ (59 – 1)
= 75.55

VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (59 – 1)
= 1,164.17 ÷ (59 – 1)
= 20.07

CovarianceEW, S&P 500 = Σ(REW,t–REW)×(RS&P 500,t–RS&P 500) ÷ (59 – 1)
= 1,272.64 ÷ (59 – 1)
= 21.94

Systematic Risk (β) Estimation

Microsoft Excel
VarianceEW 75.55
VarianceS&P 500 20.07
CovarianceEW, S&P 500 21.94
Correlation coefficientEW, S&P 5001 0.56
βEW2 1.09
αEW3 1.27%

Calculations

1 Correlation coefficientEW, S&P 500
= CovarianceEW, S&P 500 ÷ (Standard deviationEW × Standard deviationS&P 500)
= 21.94 ÷ (8.69% × 4.48%)
= 0.56

2 βEW
= CovarianceEW, S&P 500 ÷ VarianceS&P 500
= 21.94 ÷ 20.07
= 1.09

3 αEW
= AverageEW – βEW × AverageS&P 500
= 2.75% – 1.09 × 1.36%
= 1.27%

Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.83%
Expected rate of return on market portfolio2 E(RM) 13.48%
Systematic risk (β) of Edwards Lifesciences Corp. common stock βEW 1.09
 
Expected rate of return on Edwards Lifesciences Corp. common stock3 E(REW) 14.29%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(REW) = RF + βEW [E(RM) – RF]
= 4.83% + 1.09 [13.48% – 4.83%]
= 14.29%