FIN3400 Company Analysis Projects

FIN3400 Company Analysis Projects

Overall Objective:

Students will research the financial fundamentals of a public company and its market equity performance.

Project #2: Company Stock Performance (Due Week 8) (Can be done as group project at discretion of Instructor)

Outcomes:

1. Professional Communication: Students will be able to communicate effectively in

professional writing and public presentation.

2. Valuation and Risk: Students will be able to understand and apply the principles of valuation and the nature of risk to assess investment alternatives.

1. Stock and Market Risk and Return. Provide an introduction paragraph describing the price range of your stock during the period 2006-2016. You may also want to include when your company went public and when it started paying dividends as well as any price splits during the period in question.

Calculate the company’s stock average return, standard deviation, and coefficient of variation for the period 2006-2016. Use the closing price for the last day of trading for each year (December 31st) and annualized dividend. You may use finance.yahoo.com or marketwatch.com. If your stock has split, use the adjusted price. To obtain the annual divided, just simply add the quarterly dividends. Similarly, provide the same information for the S&P 500 market index.

Example (2006 to 2007):

* The divided is annualized. The $2 represents the sum of the four dividend quarters.

2. Describe the distribution of your stock returns using the statistics above. Compare

Year Actual

Price or

Adjusted

Price

Dividend* Capital Gain/loss

(CG/L)

(P2007 - P2006 )/ P2006

Dividend Yield (DY)

Dividend**2007/

P2006

Total Return (%)

CG/L + DY

2006 $20 $2 ------------------

2007 25 $2 =(25-20)/20 =.25 =25%

2/20 = .10 =10%

.25 + .10 = .35 = 35%

your stock distribution with that of the S&P 500. Did your company have a higher return than the S&P 500 index? Is your company’s stock riskier than the S&P 500 index?

3. Obtain a beta estimate for your company. What does it mean? Examine and compare the annual total returns and average return of your stock with that of the S&P500’s returns. Did it follow the Beta estimate? It would be helpful to illustrate the returns of

the company’s stock and the market.

4. Assuming that you bought your stock at the beginning of 2017 (January 2nd), what is the Year-To-Date return on your stock (pick a recent trading day). How does it compare to the YTD for the S&P 500?

5. Conclusion: State your conclusion based on the research and analysis provided

in both projects. Please answer the following question: Would you invest in this company? Why or why not? To guide your conclusion, use the following prompts:

? How has the company performed in examining its financials (operations,

investment, and financial activities)? Which areas (revenue, profits, liquidity, etc.) are strong or weak?

? How has the company’s stock performed in relation to its risk? ? What is the company’s future?

? (Group Option: If done as group project, each team member should write individual conclusions.)

 

Use report format with headings and subheadings. Cite and list all sources used in your research. Please use font size 12 and double-spaced lines. Make sure that

you have visuals exhibiting all formulas and calculations. Tables and graphs are highly encouraged.

Recommended Sources:

1. www.finance.yahoo.com

2. www.money.cnn.com

3. www.marketwatch.com

4. www.bloomberg.com

5. www.sec.gov

 

http://www.finance.yahoo.com/

http://www.money.cnn.com/

http://www.marketwatch.com/

http://www.bloomberg.com/

http://www.sec.gov/