...ABSTRACT In this valuation report, we will analyze the performance of Metcash and Woolworths (Australia) in the past six years from 2007 to 2012 and make some forecasts in order to aid investors in making decisions about investments between these two companies. Two methods of DCF valuation and relative valuation are used during the analysis. Firstly, we estimate FCFF with calculated WACC to determine the two companies’ stock price, comparing their actual current stock price. Secondly, we analyze P/E Ratio, P/S Ratio and EV/EITDA Ratio to make a comparison between the two companies and average industry. Our estimation will show that both Metcash and Woolworth are undervalued and suitable for investment 1. Overview : Metcash Limited(MTS) and Woolworths Limited(WOW) 3 1.1 Metcash Limited 3 1.2 Woolworths Limited 3 2. Metcash DCF valuation within FCFF approach 4 2.1 Weighted average cost of capital 4 2.1.1 Cost of equity 4 2.1.2 Cost of debt 4 2.1.3 Capital structure analysis 5 2.1.4 Effective tax rate analysis 5 2.2Estimation of FCFF 6 2.2.1 Growth rate expectation 6 2.2.2 FCFF and present value 6 3. Woolworths Limited DCF valuation within FCFF approach 7 3.1 Weighted average cost of capital 7 3.1.1 Cost of equity 7 3.1.2 Cost of debt 8 3.1.3 Capital structure analysis 8 3.1.4 Effective tax rate analysis 9 3.2 Estimation of FCFF 10 3.2.1 Growth rate...
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...MeadWestvaco: Leading Innovator in Global Packaging Dana Pruehs November 25, 2013 MeadWestvaco Corporation (“MWV”) is a global packaging company providing innovative solutions to well-known brands in the healthcare, beauty, and personal care, food, beverage, home and garden, tobacco, and agricultural industries. In addition to these, MWV also produces specialty chemicals for the automotive, energy, and infrastructure industries, while maximizing the value of its land holdings through forestry operations, property development, and land sales. The company became incorporated in Delaware in 2001 as the successor to Westvaco Corporation and The Mead Corporation. MeadWestvaco primary markets for their products are in North America, South America, Europe, and Asia. The company operates in 30 countries, has approximately 16,000 people, and serves customers in more than 100 nations. The Food and Beverage division produces packaging materials, as well as, designs and produces packaging for the global food, food service, beverage, dairy, tobacco end markets, and paperboard for commercial printing. In the food market arena, materials and solutions are developed for packaging frozen food, dry goods, ready-to-eat meals, drinks, and some dairy products. For the beverage market, MWV produces high-performance paperboard, carton designs, converting operations, and packaging machinery. The tobacco market produces high performance paperboard for the design and carton production of leading...
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...CSX Corporation is one of the nation’s leading transportation suppliers. The company’s rail and intermodal businesses provide rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers. CSX Corporation is the parent company of several direct and indirect wholly-owned subsidiaries, including: CSX Intermodal Terminals, Inc.; CSX Real Property, Inc.; CSX Technology, Inc.; CSX Transportation, Inc.; Total Distribution Services, Inc. and TRANSFLO Corporation. CSX employs around 30,000 people, of which about 26,000 are union. These employees perform their duties in 23 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec. CSX’s rail network infrastructure stretches westward to Chicago, southward to New Orleans, and northward to Syracuse. CSX’s rail operations can be grouped into four areas based on geography. The Coal Network connects coal mining operations in the Appalachian regions with industrial areas in the northeast and mid-Atlantic. The Interstate 90 corridor links Chicago and the Midwest to metropolitan areas in New York and New England. This route supports high speed intermodal, automotive and merchandise service. The Interstate 95 corridor connects Charleston, Jacksonville, Miami, and other southeastern cities to the major northeastern cities like Baltimore, Philadelphia, and New York. The Southeastern Corridor runs between western gateway cities like Chicago, St. Louis, and...
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...3/14/2014 1 RELATIVE VALUATION Introduction 2 The majority of equity research reports are based on multiples Most analysts use relative valuation because it is safer It is a short term strategy Forward multiples are better then historical ones because the price is related to expected cash flow Relative valuations usually means that you need to: 1. 2. 3. Come up with comparable companies Standardize by dividing by something common to all stocks Compare based on certain rules of thumbs related to each ratio that are commonly used in decision making 1 3/14/2014 The four Stages in Relative Valuation 3 1. 2. 3. 4. Multiples are easy to use and easy to misuse. There are four basic steps to using multiples wisely and for detecting misuse in the hands of others Define the multiple 1. Look at how it is computed (Consistency of numerator and denominator): Example P/E vs. P/EBITDA 2. Sometimes, the multiples with the same names can be computed differently(uniformity of definition) Describe the multiple : Look at the cross sectional distribution of the to know what is median multiple Analyze the multiple: embedded in each multiple there are key DCF factors that are driving the multiple (i.e. DCF assumptions that you are trying to run from) Conclude: Only after I follow the first three steps, I can reach a conclusion. P/E ratio - Define 4 Consistent , how much price you are willing...
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...Summary - Valuing Wal-Mart In utilizing the fundamental data provided by the 2010 Richard Ivey School of Business Foundation article titled Valuing Wal-Mart - 2010, I have made the following conclusions regarding the value of Wal-Mart (WMT) stock as of February 2012. * Utilizing the constant growth dividend discount model (DDM), the value of Wal-Mart’s stock price is $60.20. The most recent closing price of Wal-Mart stock was $53.48. Given this information, the constant growth DDM valuation suggests that the Wal-Mart stock is currently undervalued. * Utilizing the two-stage DDM approach, the value of Wal-Mart’s stock price is $83.95. Similar to the constant growth DDM valuation conclusion, the Wal-Mart stock is currently undervalued. * The capital asset pricing model (CAPM) was used to determine the appropriate required rate of return on Walm-Mart’s stock. The required rate of return for Wal-Mart is 7.01% * In following the concepts of the price/earnings (P/E) multiple approach, Wal-Mart’s intrinsic value based upon the P/E multiple approach is $55.03. Given the current stock price of Wal-mart of $53.48, this valuation would support that Wal-Mart’s stock is undervalued. *Several assumptions were made within the various valuation methods. The assumptions are noted and defined within each of the following sections. In summary, in employing the dividend discount valuation methods and price/earnings multiple approach, the Wal-Mart stock would be a “buy”...
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...IRobot Security Analysis Abstract This paper contains an analysis of the stock security iRobot (irbt) which has had several highs and several lows over the past few years due to the fluctuations in the US economy. The overall analysis dictates how the state of the economy can affect an individual stock price even though the company has had relative good growth in customer sales over the last five years. The overall analysis looks at the return on equity, future growth rate of earnings, required rate of return and the company’s intrinsic value. Graphs and/or tables will be used to support the overall findings of the security. Introduction Robotics is on the rise, the concept of creating machines that can operate autonomously has been a goal set by man since the beginning of time. iRobot (irbt) has taken on this concept and has truly made it a reality in our time. Quite simply “iRobot designs and builds robots that make a difference” (iRobot, 2013). That difference is seen in the lives of its customers. iRobot was founded in 1990 by Massachusetts Institute of Technology roboticists with the vision of making practical robots a reality. iRobot’s corporate headquarters are located in Bedford, Massachusetts. The company also has offices in California, the United Kingdom, China and Hong Kong. iRobot designs, develops, and markets practical robotic solutions that undertake mundane and/or dangerous tasks for consumers, government agencies, military, and industry...
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...INVESTMENT ANALYSIS AF335: Investments Table of Contents 1. Introduction…………………………………………………………………………....3 2. Equity Analysis………………………………………………………………………..3 3. Recommendation……………………………………………………………………....6 4. JLG Equity Analysis Template………………………………………………………7 5. Value Line Report……………………………………………………………………12 INTRODUCTION PepsiCo is a world leader in convenient snacks, foods, and beverages, with revenues of more than $39 billion and over 185,000 employees. PepsiCo owns some of the world's most popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). Their brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). I’ve selected PepsiCo as my investment and Value Line report was the key factor in my decision. EQUITY ANALYSIS Equity analysis includes analysis of traditional and value-based metrics. Traditional metrics include expected growth rates, price multiples, projected ROE, fundamental stock return and residual income. Expected growth rates and price multiples...
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...I. Introduction Financial examiners and practitioners have long been concerned in comprehension how the behavior of financial forecaster influence investment market efficiency. These investment analysts generate company earnings prediction, note down the details on particular organizations, provide business and sector examination, and make stock suggestions. Analysts assemble and practice a variety of information about numerous stocks, from their intrinsic values comparative to their up to date market prices, from their valuation multiples and to conclude with the rate the investment prospective of every stock. In this research paper, I as an investment analyst will inspect Pepsi company’s analyst predilections across stocks, and estimate the sources of the investment worth presented by analyst stock recommendations and its changes for the particular company. II. What is Stock Valuation Stock valuation is a method of estimating the average intrinsic value of a stock by applying fixed formulas that cause in numerous financial indicators. Every firm has an intrinsic value also known as strike price of a company, and that strike price is based on the quantity of free cash flow they can give throughout their effectual era. A forecaster (analyst) valuing the corporation possibly will look at company’s administration, the composition of its capital structure, expectation of future earnings, and market importance of resources (assets). According to Nguyen (n.d.), “When trying to...
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...network of 500 company-owned and independent distributor facilities and more than 5,200 dealer locations in over 190 countries and territories. Cummins was founded in 1919 and currently ranks 186 on the Fortune 500 list. Cummins is headquartered in Columbus, Indiana and currently holds 46,000 employees worldwide. Analysis Stock Price: $147.18, 52 week High: $151, 52 week Low: $103.41, Price to Book: $3.66, Beta: 1.89 P/E Ratio Cummins Inc. currently has a P/E ratio of 18.6 which is below the industry average of 20.5. The comparison of these two ratios suggests that Cummins may be slightly undervalued in the industry. This P/E ratio suggests that investors expect growth in the future for Cummins Inc. PEG Ratio The current PEG ratio for CMI is 1.17 and the industry shows a PEG of 1.23. This comparison shows that CMI is relatively fairly priced. Dividends and EPS Cummins Inc. has raised their dividend per share steadily per year. The dividend has gone from $.40 in 2012 to $.625 earlier this year. Since CMI posts a higher dividend yield rate than the rest of its industry at 1.7%, one can say that the investors are receiving more cash flow per dollar invested or a bigger “bang for their buck”. The annualized dividend for the company is $2.50. Liquidity, Solvency, and Cash Flow Cummins seems to be more than...
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...Brochure More information from http://www.researchandmarkets.com/reports/680564/ The Top Five Global Pharma Companies; Where they are Now and Where they heading? Description: A mini report identifying drivers and barriers to sustaining financial performance over the next 5 years for the top five global pharmaceutical companies -Johnson & Johnson, Pfizer, GSK, Novartis and Sanofi-Aventis This report presents the cases of the top five global pharma companies: J&J, Pfizer, GSK, Novartis and SanofiAventis and identifies their key growth areas. Pooling data from 6 major investment institutions, it delivers a 360o analysis on these big five global pharma with further value add and refinement coming from 8 leading key opinion leaders, to produce an easy to read 25 page PowerPoint deck. Johnson & Johnson has reached a critical point in its product portfolio which should see the company convert from “cash cow” (high market share; low market growth) to “star” (high market share; high market growth) status by 2010. This is reflected in J&J having not less than 6 late stage drugs that will either unveil phase III data or be filed with the FDA within 2008 culminating in strong impact on its P&L account by 2010. Likewise the other cash cow Pfizer, boasts of at least 17 disclosed products under late phase development, with launches in the post-2010 period, thus are likely to buoy double digit sales growth beyond Lipitor patent expiry. GlaxoSmithKline on the other hand, has a product portfolio...
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...Adam Richmond Language A 2nd hour 2-27-2013 ABDUCTION! The book I read is titled ABDUCTION! .Peg Kehret is the author of this book and the genre is non fiction. I had a really fun time reading this book because it was very suspenseful and once I started reading I could not stop. What’s happening in this book is. Matt, a six year old boy, is kidnapped by his father, Denny, who he had never met. Though he has always dreamed of meeting him, nothing is the way he thought it would be given his father is only using Matt to impress his sister who often brags about her two well-raised sons. With little clues to follow, Matt's mother and sister, and the police, are doing everything they can to find him. Matt's sister, Bonnie, sees Matt at a Mariner's baseball game, but is caught by Denny. Now both captive, the siblings attempt to escape. On the ferry, Bonnie signals to Matt to throw his hardest pitch. The baseball hits Denny, which allows the two to escape. Denny is then taken away by the police. The protagonist in this book would be Matt himself because the character he really shows himself as throughout the book just really surprised me. One thing Matt does to really show that he is the protagonist is that he saves himself, and his sister. For example they were on a boat, and Bonnie Matt’s sister was trying to get Matt back but was then spotted by Denny. Matt happened to have a baseball form the game he had just went to and when Denny tried to grab Matt and Bonnie...
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...Case Study Summary (SAUDI STOCK MARKET) The purpose of this article is to illustrate a simple and easy method to identify undervalued stocks in Saudi Stock Market to enable the investors for making well informed and conscious investment decisions. Actually, Investing is the act of committing money or capital to an endeavour with the expectation of obtaining an additional income or profit. True investing doesn't happen without some action on our part. A "real" investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping Lady Luck is on our side. It is much the same with investing in equities but most of the Saudi investors ignored this basic principle of investment. This is evident from the volatility of the Saudi stock market during the past 12 months which witnessed high speculation, lack of direction, and overall confusion that led to the rise and fall of the Saudi stock market index (TASI) beyond justifiable levels. The aim of investing in equity is to get a healthy return by holding the stock for a longer duration. The return on a stock (dividends and price appreciation over the holding period) is tied to the future performance of the company. Further, an investor should know why he is buying or selling a particular stock and the timing of his buy-...
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...Vail Resorts, Inc. (NYSC: MTN) June 22, 2014 Securities Analysis Vail Resorts, Inc. (MTN) Company Background (Life Cycle Analysis) Vail Resorts, Inc. is a Premium Luxury Resort company that resides around the mountains and their product would be the great outdoors. The outdoors activity is what brings people to the resort. Their mission statement is “Experience of a Life Time”. Vail Resorts, Inc. considers themselves to have 5 different stakeholders, first is the guest, second is their employees, third is the community, forth is nature and the environment and the fifth is the shareholders. All 5 stakeholders are very important to Vail Resorts, Inc. and are part of every thought when growing the company. The foundation of the company was established in the mid 1950’s by some skiers (Pete Seibert and Earl Eaton) that had a dream to build a ski resort like no other. Vail Resorts, Inc. falls into three different areas which are the mountain, lodging, and real estate. The company is known for their mountain resorts which is Vail, Beaver Creek, Breckenridge and Keystone that is in Colorado; Heavenly, North star and Kirkwood in the Lake Tahoe area in California and Nevada; Canyons in Park City; Afton Alps in Minnesota and Mt. Brighton in Michigan. Vail Resorts, Inc. Hospitality which is the lodging division that owns and operates hotels, condos and private residences located in the area. The lodging division of the company includes five Rock Resorts luxury hotels...
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...ั ิ สนติ สงหว ังชา ~ 1 ~ yoyo's investing way www.yoyoway.com ั ิ สนติ สงหว ังชา 2006-2010 รวบรวมโดย พร ์ บญชนะวว ัฒน ์ ี ุ ิ https://www.facebook.com/WizardKidTrader YOYO'S WAYS ~ 2 ~ yoyo's investing way Year 2006 www.yoyoway.com ั ิ สนติ สงหว ังชา ~ 3 ~ ั ิ ื “สนต ิ สงหว ังชา” (YOYO) เสอหนม..ไฟแรง ุ่ จากดกรในการจัดการพอรตหุ ้นทไมธรรมดาเพยงแค่ 6 ปีของการเข ้า ี ี ์ ี่ ่ ี ั ิ วงการ “สนติ สงหวังชา” สามารถสร ้างผลตอบแทนได ้แล ้วกว่า 27 เท่าตัว ด ้วยแนวคิดทีเรียบง่าย ลุมลึก สุขมใจเย็น จนได ้รับรางวลผู ้ถอ ่ ่ ุ ั ื ิ ั ื่ ั หุ ้นคณภาพมาแล ้ว เชญพบกับทายาทสงกัดมวยชอดังผู ้ได ้รับชยชนะ ุ ั ี ั ิ บนสงเวยนหุ ้นของ “สนต ิ สงหวงชา” ั ความเคลือนไหวในรอบปี ่ ื้ ก็ปรับพอรตหุ ้นตลอดเวลา โดยการขายออกและซอเข ้าจํานวนเทาๆ กน ์ ่ ั ึ่ ื้ เพราะโดยปกตแล ้วผมจะไมถอเงนสด ซงถ ้าอยากจะซอหุ ้นก็ต ้องขาย ิ ่ ื ิ ื้ ื้ ตัวอืนเพือเอาเงินมาซอ ไม่มแบบทีวาขายแล ้วเก็บเงินสดๆ ไว ้รอซอหุ ้น ่ ่ ี ่ ่ อย่างนีไม่ม ี ้ ด ัชน ี 400 จด ขายขาดทน? ุ ุ โดย ปกติผมเล่นหุ ้นจะไม่ดต ้นทุนตัวเอง ไม่เคยรู ้ว่าตัวเองมีต ้นทุน ู ิ ่ ู เทาไหร่ จะวัดผลงานของตัวเองโดยจะดูวาต ้นปี มลค่าสนทรัพย์รวมมี ่ เทาไหร่ และปั จจุบันมีเท่าไหร่ โดยจะแทร็คทุกๆ ปี พูดง่ายๆก็คอดูเป็ น ่ ื พอรตรวม ไม่ได ้มานั่งดูต ้นทุนราคาเป็ นรายตัวว่าขายไปขาดทุนหรือ ์ กําไร แตถ ้าหากไปมองตัวเลขจรงๆ ก็มทังขาดทนทงกําไรผสมกน ่ ิ ี ้ ุ ั้ ั ่ แล ้วแต่ชวง ่ มองแคสวนตาง ่ ่ ื้ ทไมมาสนใจต ้นทนราคาเป็นรายตัวเพราะความสําคัญในการซอหุ ้นมัน ี่ ่ ุ ื้ อยูทวา หุ ้นตัวนันๆ ราคาจะขนได ้อกเทาไหร่ แต่ราคาทีเราซอมาไม่ได ้มี ่ ี่ ่ ้ ึ้ ี ่ ่ ้ ความสําคัญอะไรเลย...
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...Market capitalization – number of shares outstanding multiplied by price per share (do not confuse with market capitalization rate). Liquidity – the ability to convert an asset into cash easily and at fair value * Long position – if you are “Long” a stock, you own it. * Short position -- If you are “Short” as stock, you have shorted it. Order Type | Purpose | Trigger price | Market Order | Trade (buy, sell or short) at current price | N/A | Limit buy | Buy at an attractive price | Below current price | Limit sell | Sell at an attractive price | Above current price | Stop-loss | Limit loss on a long position | Below current price | Stop-buy | Limit loss on a short position | Above current price | * Limits and Stops are called contingent trade orders because the trade is contingent on the price. * Margin percentage = equity/stock * Equity=Assets-Liabilities * For long positions the stock is an asset rf= 30 year treasury (thay E(rm)-rf = MRP) * When the constant growth DDM holds, the stock price will grow at the same rate as dividends * Capital Gains Yield equals ‘g’ * The Expected HPR then is: * Growth Rate: g= ROE * b * b= plowback ratio= (1- payout ratio) * payout ratio = div/EPS * ROE = Net Income/Shareholder’s Equity * The capital asset pricing model (CAPM) defines the relationship between risk and return E(RA) = Rf + A(E(RM) – Rf) * Risk-free rate Analysts and Corporations typically use current...
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