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Analysis of a public traded firm's stock price trend

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Analysis of a public traded firm's stock price trend. 

 

The final case consists of the analysis of a public traded firm's financial performance, capital structure and the trend of the stock in the past 5 years. 

 

How and whether the firm's stock price will be affected by the financial performance and risk factors. Assume you are making a short-term investment decision for your company, how will you collect data on a stock and give the analysis? The case is a review of ratio analysis, DCF approach and CAPM in real-life example. 

 

The case analysis must be quantitative analysis. 

Specific steps: 

1. Select a firm that is publicly traded on Nasdaq, NYSE or TSX. The firm must pay dividend in the past years.
2. Obtain information about the firm such as which products it sells, where it does business etc.
3. Using ratio analysis and give your comments on the company's financial performance, including profitability analysis, for example, the Profit Margin, ROA, ROE. Please include liquidity, solvency, efficiency, and profitability ratio analysis, and compare the ratio analysis to the industry averages. Please interpret and explain the results of your calculations (Must show your work in ratio calculations).
4. Estimate the firm's stock value by using the Dividends Growth Model and CAPM. Compare the firm's stock market value to the intrinsic value you calculated and explain the difference in values.
5. Identify the major risks faced by the firm and whether it hedges its risk exposures or not. This information is typically reported in the firm's annual report or the statements filed with the regulatory body in the firm's home country.

 

The report should include (1) A description of the firm, its businesses and geographical operations etc., and how and why you expect the firm to be impacted by certain risk factors. 

 

Recommended information sources: 

Data: Yahoo finance, company websites Annual reports and other official filings: 

Canadian firms: www.sedar.com ; 

US firms: SEC Filings & Forms (EDGAR) 

Other sources: Mergent Online, Wall Street Journal, Globe and Mail, Economist, Financial Times etc.