Assignment #2: Valuation

Assignment #2: Valuation

Submit a hardcopy of this assignment in the class by the due date.

Your Name: / Date:
Company: / Ticker Symbol:
Current Stock Price: / Sector:

Use 10 years of history for the valuation information below.

S&P 500 Valuation (Type in stock ticker SPX <Index> <GO>)

Use GF function in Bloomberg to find the following

Absolute Basis / High / Low / Median / Current
P/E
P/B
P/S
P/EBITDA

Do you think your stock should trade at a premium multiple to the market as a whole? Why? Think about its long-term growth and cyclicality vs. the market as a whole.

Sector Valuation (Type Bloomberg code <Index> <GO>)

Sector / Bloomberg Code / Sector / Bloomberg Code
IT / S5INFT / Utilities / S5UTIL
Financials / S5FINL / Cons Discret / S5COND
Materials / S5MATR / Cons Staples / S5CONS
Healthcare / S5HLTH / Industrials / S5INDU
Telecom / S5TELS / Energy / S5ENRS
Absolute Basis / High / Low / Median / Current
P/E
P/B
P/S
P/EBITDA
Relative to SP500 / High / Low / Median / Current
P/E
P/B
P/S
P/EBITDA

Do you think your sector is relatively cheap/expensive/inline on this basis? Why?

(Answer should be determined by how the sector currently trades versus its historical norm and whether that is warranted. Abbreviated example: Sector is trading below its 10 yr average, but this is warranted since growth has slowed and higher risk)

Consensus Revenue and Earnings Estimates

Using Bloomberg, what is the latest full calendar year of reported earnings?

Complete the table below:

Using Bloomberg (EM function), what are the latest annual reported revenues and EPS? What are the consensus annual revenue and EPS estimates (and growth rates) for the upcoming three years?

Year / Last reported year / 1 yr forward estimate / 2 yr forward estimate / 3 yr forward estimate
Revenue
% growth from prior year
Shares Outstanding
Earnings Per Share
% growth from prior year

Stock Valuation

Use GF function in Bloomberg to find the following:

Absolute Basis / High / Low / Median / Current
P/E
P/B
P/S
P/EBITDA

Use <RV> function in Bloomberg and select <Comp Sheets> tab

Ticker / P/E TTM / P/S TTM / P/B / P/CF TTM / EV/ EBITDA TTM
Average
Your Ticker
Peers

Do you think the stock is relatively cheap/expensive/inline on this basis? Why?

Target Price

Absolute Valuation / Current
Multiple / #Your Target Multiple / Target/
Current (% of Current) / Target Price
P/E
P/B
P/S
P/EBITDA

* Your target Earnings/Share should come from the Consensus Revenue and Earnings Estimates section of this assignment.

There are ten sectors in the S&P500, what are the returns of each over the given time frame? Use the TRA function in Bloomberg.

Sector / Last 12 months / Last 3 months / Last 1 month
S&P500 (SPX <Index> <Go>)
Energy (S5ENRS <Index> <Go>)
Material (S5MATR <Index> <Go>)
Industrials (S5INDU <Index> <Go>)
Cons Discr (S5COND <Index> <Go>)
Cons Stap (S5CONS <Index> <Go>)
Healthcare (S5HLTH <Index> <Go>)
Financials (S5FINL <Index> <Go>)
Info Tech (S5INFT <Index> <Go>)
Telecom (S5TELS <Index> <Go>)
Utilities (S5UTIL <Index> <Go>)

When will the company next report earnings? (Ticker <Equity> DES <Go>)

Knowing what you now know, would you want to own this stock? Why?

Assignment #2 8/30/16 1