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FIN320 Individual equity report Spring 2018
- Use data from finance.yahoo.com to answer the following one of the companies you choose:
- Select the Company tab and enter the ticker symbol for your chosen company. Click on the Profile tab to see an overview of the company. What is the latest price reported in the Summary section? What is the 12-month target price reported in the Analyst Opinion section? Calculate the expected holding-period return based on these prices.
- A firm’s beta can be estimated from the slope of the characteristic line. The first step is to plot the return on the firm’s stock (y-axis) vs. the return on a broad market index (x-axis). Next, a regression line is estimated to find the slope.
- Go to finance.yahoo.com, enter the symbol for a company of your choice, and click on Get Quotes. On the left-side menu, click on Historical Prices, and then enter starting and ending dates that correspond to the most recent five years (you can pick between 1 and 5 years ). Select the Daily option. Save the data to a spreadsheet.
- Repeat the process to get comparable data for the market index. You can use S& P 500 (symbol ^ GSPC) for US stocks. Download the data and copy it into the same spreadsheet as your firm’s data with dates aligned.
- Sort the data from earliest to latest. Calculate the return on the stock and the return on the index for each day using the adjusted closing prices.
- Prepare an xy scatter plot with no line inserted. Be sure that the firm’s returns represent the y-variable and the market’s returns represent the x-variable.
- Select one of the data points by pointing to it and clicking the left mouse button. While the point is selected, right-click to pull up a shortcut menu.
- Now compute the stock’s alpha in two consecutive periods. Estimate the index-model regression using the first 30 months of data. Now repeat the process using the second half of the sample. This will give you the alpha (intercept) and beta (slope) estimates for two consecutive time periods. How do the two alphas compare to the risk-free rate and to each other?
You MUST show your work in Excel and attached.
- You need to submit the Excel file used in your analysis which has the historical balance sheet, income statement, financial ratio calculations, cash flow estimation, Valuation using DCF, valuation using multiples.
You need to list all references used in the report (any articles or sources used). Copying and pasting is NOT allowed unless you use quotations and cite it using proper methods.
I highly recommend visiting the website of the company that you are analyzing. Then go to Investor relation section and read parts of the 10-K and 10-Q and investment presentation. You must understand the business and its value drivers in order to find the fair value.