TERM PROJECT
PART I
Apple company
A. Select a security and state the reason(s) for your selection.
Select a publicly traded company so you can find data for it.
B. Provide a description, brief summary of the history of the company, its line(s) of business, and competitors.
Description: Use Bloomberg to get a brief description (few Lines). Mergent Online is another source. You can access Mergent from our school's website by following the steps: Academics""Libraries""Resources" "Databases" "All Subjects" click on "M"
History: Can be obtained from the company's website, Bloomberg.
Competitors: Use Mergent, under search type the name or ticker symbol for the company you selected and then select "competitors".
Choose five out of the list of competitors (the ones that are closest in size to the firm selected).
Use Bloomberg and while in F8 type : SPLC -you will see the "peers" listed at the bottom of the screen or RV- the name of peers appear on the LHS of the screen.
C. Present daily performance data for the period.
Use yahoo finance to download daily closing prices by typing the company name in the search tab, select "Historical Data" "Time Period" "Frequency" Daily, then click on "Apply" and then "Download Data" - data are downloaded in an Excel file you can save on your computer for later use..
D. Use a fundamental approach in analyzing each company.
1. Overall Macroeconomic Outlook
Global and US macroeconomic outlook. At a minimum include current and forecasted GDP growth, inflation rates, and unemployment rates. Use data from bls.gov, imf.org , the conference board, and Bloomberg among others.
2. Industry Analysis
Use Mergent Online or Bloomberg to obtain the company's SIC (Standard Industrial Classification) and NAICS (North American Industry Classification System) code.
Use Bloomberg - type BI while in F8 i.e . the equities module, or use the Value Line Investment Survey database and Business Insights: Essentials (available at the Iona libraries website).
3. Company Analysis
• Ratio Analysis
Use Mergent Online to get five years worth of ratios for your time series (trend analysis) and then use the Key Business Ratios database available at our Library to search industry averages based on the company's SIC code for your cross sectional analysis.
• Earnings Valuation Models
• Dividend Valuation Models to determine "true" value
• Free Cash Flow
Use two out of the three approaches to estimate the intrinsic value of the sock you selected.
E. Estimate daily returns and risk of the security (beta and standard deviation).
The actual daily returns are calculated from the daily closing prices (data from yahoo finance you obtained in part C above). You can use the formula for actual rates of return from chapter 1.
Calculate the beta of the stock using Bloomberg (while in F8 type the name of the company then type beta. Use the adjusted beta you obtain from the regression analysis.
To calculate the standard deviation of the daily returns use excel. While in excel select Formulas-More Functions-Statistical- STDVA and then highlight the column with the stock's daily returns.
F. Compare the security's actual return with that of the market (S&P 500) for the stated period of time.