This project requires you to perform a financial analysis of a specific company listed on the New York Stock Exchange or on the NASDAQ. The project is designed to assist you in integrating many of the topics learned in this course, as well as to give you an opportunity to apply your knowledge in a practical way. The project requires you to utilize resources from the web to search out real-world data relating to your specific company. In addition, this exercise should provide training in writing business reports and working effectively.
Some rules:
1) This project will be done on an individual basis.
2) Each student will be assigned the company to be analyzed.
3) The final report and presentation is due at the start of class on April 20. Take this deadline seriously: no late project will be accepted for any reason.
Please use the data regarding the selected company’s annual or quarterly reports from Morningstar or ValueLine. I strongly encourage using Bloomberg terminal to get more information. Also go to the company’s website to get the recent quarter conference call video/audio. This will help you understand the company’s business profile: sector, product and services, customer and end markets, distribution channels and geography etc.
Final Report Requirements:
1. Executive Summary – a one-page summary of the analysis, forecasts and recommendations.
2. Introduction – state the purpose of your report, identify and describe your chosen industries, and the publicly listed company to be analyzed. Explain the organization of your report.
3. Financial statement analysis
A) Examine the firm’s balance sheets, income statements and cash flow statements. How are the firms doing financially? Also conduct an historical, comparative ratio analysis, and DuPont decomposition of your company. The ratio categories should include liquidity, asset management, debt management, profitability and market ratios. The analysis should cover the past three years. Many of the ratios can be found on Mergent, Bloomberg, ValueLine, Morningstar. Identify whether the firm has competitive advantage(s) and whether they can maintain the competitive advantage(s) over time.
B) Plot a graph of the comparative stock price performance of your company, its competitors, the S&P500 and your industry for one, two and three years. Take note of the 52-week high and low and the current price.
C) Based on your two-year economic and financial forecast, fundamental ratio analysis, provide a two-year forecast of each of your company: sales, earnings per share, dividends per share, P/E multiples and share price, etc.
4. Valuation – Use the stock valuation models (Discounted Dividend Model, Discounted Cash Flow models, and relative valuation methods) to determine the firm’s intrinsic value, and make investment recommendation
– Indicate whether you recommend a strong buy, hold, sell or strong sell for your company. In this part, you need to show me how to calculate the beta from excel regression
5. Investment Risk Assessment – provide discussions on all assumptions for valuations and risks associated with these assumptions.
Note: Organize numbers (ratios) into summary tables. If you cite information, please refer to the source of the information.