Purpose

To give students practical experience and in-depth understanding of various analytical topics covered in the course.

Format

Paper must be typed, double-spaced. Footnotes should include all sources of information including websites and should be specific. The site yahoo.finance.com is NOT adequate. Use of information without attribution is considered plagiarism, and will result in a zero for the project.

Company Selection

Each group of students will be assigned a company once the group members are submitted.

Analysis

In general, you will be asked to perform an industry analysis first, followed by a specific company analysis involving ratios that are compared to other firms in the same industry. The Bruce S. Sherman trading room, Thomson One, and S.E.C. data contain extensive resources that may be used to obtain data for your companies. Other information will be used and the bulk of the analysis will be to document how you arrived at the conclusion of how the company is valued in the market.

A typical industry analysis involves the following:

Overview

Location in industry life cycle process and what impact this will have on projected industry sales and profits

Market trends and factors affecting industry performance

Analysis of both historical factors and forecasts of future trends

Track industry growth relative to one of several economic series. Provide graphs and interpretations of the graphs

Analysis of competitive forces Use of the Michael Porters framework. Discussion of industry structure:

Rivalries

Threat of new entrants

Threat of substitute products

Bargaining power of suppliers

Bargaining power of buyer

Skill and competence of firms management

Relative industry valuation: discuss whether industry is currently over or undervalued relative to the S&P 500. Include reasons to support your conclusion

Fundamental analysis

It should involve understanding the value of a company as a mechanism for providing a return to investors. Typical fundamental analysis involves:

Ratio analysis how does the companys ratios compare to industry average ratios, as well as to major competitors

Internal liquidity

Operating performance

Risk analysis

Growth analysis

External liquidity ratios

Valuation models

Incorporate various valuation models (i.e. P/Es, dividend discount, etc.) in your analysis to determine if your company is undervalued, overvalued, or fairly priced

Comparisons to close competitors in the industry

Submission materials

You will be required to prepare a detailed carefully reasoned company valuation analysis including all elements described above. This analysis is to be well-reasoned and supported with appropriate exhibits. Following the analysis, you may also include exhibits that highlight the raw data sources including S.E.C documents.

Specific tentative time deadlines are provided below: