- Provide short background information on your company. This could include the following, and should not exceed 1-2 paragraphs (you can copy/modify this info from various public sources):
- Describe your company’s stock performance during the past years (say, 3 years). You may simply show stock returns compared to returns on broad market and/or industry indices (just copy a graph from some public finance website, such as MSN Money, Yahoo Finance, BigCharts, etc.).
- a description of its products, customer base, major suppliers;
- major recent corporate events (M&A, spinoff, dividend issuance, repurchase, new stock/bond issuance, change of executives, new product release, expansion of new multinational market, law suit, credit rating changes, etc)
- recent events from the company’s major competitors and industry trend
- Conduct a discounted cash flow valuation of your company. You have to forecast ALL the components of FCF (So, your analysis must result in producing of a spreadsheet similar to the spreadsheets discussed in the class.)
- Present a matrix showing the sensitivity of your estimate to changes in assumptions about valuation parameters (pick TWO such parameters)? What are the key “value drivers” for your company?
- Make a thorough analysis of the company’s capital structure. What was the market reaction to the announcement of a new stock issue? What was the market reaction to the announcement of a new bond issue? Do you think it’s at optimal capital structure? Why or why not?
- What’s the company’s dividend and repurchase policy for the last three years? What do you expect the company’s dividend and repurchase policy as you would expect for the next three years?
- Why risk management strategy does the company use? What types of interest risk and exchange risk (if any) the company is facing? Specifically, what are the financial derivatives being used by the firm to manage risk?
- If the company is involved with international management, make an analysis on how is the current status of the company’s multinational financial management? Explain the rationale behind interest rate parity and purchasing power parity.
- Based on your analysis, is there a way in which the company could increase its value?
- Explain. Evaluate your company against a carefully selected list of its comparables and/or regression analysis.
- Choose a multiple that you think is the most appropriate for comparing the firms in your group/sector.
- Based on your valuation results (using both discounted cash flows and relative valuation methodologies), what “should” the stock price of your company be? How do you explain the difference between your estimated stock price and its actual stock price?
- Make a final recommendation – would you buy or sell? Explain.
