21 Feb Individual Research Project Part 3 Market Ratios Analysis and Stock Valuation

Individual Research Project Part 3

Market Ratios Analysis and Stock Valuation

Due at the end of week 7

Based on the course materials studied during week 1 > Chapter 6> Part 6.5 Market Value ratios and Chapter 11> Part 11.1 > Multiple Approaches to Stock Valuation

This project is closely aligned with the Course Outcomes and Finance Program Objectives.  Completion of this project can be used as part of a portfolio to show potential employers the student is skilled at performing company valuations and financial statement analysis and can be included on the student's resume.

The project will be completed as an Individual Assignment. THE COMPANY to be analyzed for this project is selected by the instructor.

OBJECTIVE

Please remember that you are the financial analyst of THE COMPANY and should prepare the report to be read by the chairman (CEO) of THE COMPANY.

YOUR SPECIFIC ASSIGNMENT

Please note that you don’t need to sign up for any premiums or to pay for any information for the project.

Using the information from the websites the student will develop a valuation of stock performance for THE COMPANY (SELECTED BY INSTRUCTOR). (The evaluation portion will total 85% of the assignment grade)  

-1—Introduction (5% of the project grade)– The paper should begin with a short introduction that explains the purpose of the paper and provides an overview of the contents that follow (one short paragraph). 

-2- Collect and evaluate the data about market ratios of the assigned company for the most recent available year. (Totally 65% of the project grade).

a) Collect the market ratios for the company and for the main competitor for the most recent available year. Present the market ratios as the table(s) in your project.

· Price/Earnings ratio

· Price/Cash Flow ratio

· Price/Book ratio

· Price/Forward Earnings

· Dividends per share

· Dividend Yield

· PEG ratio (optional)

These ratios are available on www.morningstar.com > type the stock symbol in the Search window to get into the company’s page. Click on Valuation.

Dividends per share and Dividend yield are available under tab Dividends. If you are using published ratios you must indicate that and cite their source.

b) Write about 2 pages of analysis of the market ratio results that you found. Compare the market ratio results against main competitor. In your report please answer the question: In accordance with the results of your market ratios analysis, is the company’s stock undervalued, overvalued, or properly valued? In accordance with your analysis, is it reasonable to buy the stock of this company? Please explain your answers.

-3- Compare with the Analyst ratings (10% of the project grade)

Free Analyst Ratings are available in www.marketwatch.com – To find Analyst Ratings for your company stock you need to type the stock symbol in the Search window to get into the company’s page. Click on Analyst Estimates > Scroll down to Analyst Ratings.

In accordance with the analyst ratings , is it reasonable to buy the stock of your company? Compare your conclusion based on your market ratio analysis with the analyst ratings. Will it change your decision to buy this stock? Summarize your findings in one paragraph.

-4- Reflection – the students should write a paragraph in their own words reflecting on what they learned from the assignment and how they think they could apply what they learned in the workplace or everyday life.  (5% of the project grade).

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):

-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary. Each section of the paper must begin with sub-headings.  Please use the sub-headings included in the assignment. Please use double space, with one-inch margins, and use 12-point Times New Roman font. (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper. All tables and charts should have the numbering system, like “Table 1…”, the title, and foot/end note to reference the source of the information. (3% of the project grade)

Logical and Smooth Flowing Transitions and Relationships among Sections of the Written Report (3% of the project grade)

Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5% of the project grade)

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