Stock Presentation Consumer Discretionary Sector November 17 th, 2009 Tiffany Arnett, Pinjalim Bora, Sam Brickell.

Slides:



Advertisements
Similar presentations
Utilities | Stock Recommendation Nihar Shah Michael Song
Advertisements

1 1 Ch17, 18, 19 – MBA 566 Security Valuation and Analysis Macroeconomic and Industry Analysis/Fundamental Analysis Equity Valuation Ratio analysis.
Best Buy Co. Inc. (BBY) $47.46 Wednesday, April 11, 2007.
Exxon Mobil. - Petroleum Industry structure: - 5 sectors of operations (Upstream, downstream, marine, pipeline, and service/supply) - Extremely high barriers.
Chapter 9 An Introduction to Security Valuation. 2 The Investment Decision Process Determine the required rate of return Evaluate the investment to determine.
Materials Sector Analysis Paul Lewis Steve Meredith Summer 2013.
Industrials Sector Jason Kraynak and Wade Guzdanski.
Consumer Discretionary Sector Stocks February 23 rd, 2010 Sekhar Achanta,Tongyu Zhou.
Manish, William, & Sarah. CURRENT HOLDINGSSUGGESTED HOLDINGS  AT&T0%  Verizon0%  China Mobile Ltd.2.41%  NII Holdings0.98% Buy:  AT&T2.14%  NII.
Energy Company Presentation Dan Geisler Olga Boder(Firdman) Fall 2009.
Team Members: Hanh Bui Vamsi Namburi Hang Nguyen Tejaswi Ponnada
McDonald’s Corporation
Check the Vital Signs. Why Invest? Possibility of high returns Learn about companies and the people and products behind them Share on companies and products.
Skinner, Sureka, Yan1. Recap: Sector Weighting Financials are underweighted by 610 BPs Skinner, Sureka, Yan2.
Greg Price Greg Shaskus Min Shen Matt Sims Chris Stuart.
Investments: Analysis and Behavior Chapter 10- Financial Statement Analysis ©2008 McGraw-Hill/Irwin.
Luiz Pinto, Matthias Sigrist, Daniel Packard.  Decrease SIM portfolio by 43 basis points to come in line with S&P 500  Reallocate funds within the Telecommunication.
Consumer Discretionary Joshua Anderson Kunal Arora Branyan Booth Joseph Chandraraj.
Skinner, Sureka, Yan1. S&P500 Sector Weighting Information Technology Largest Sector : 18.6% Telecommunication Services Smallest Sector: 3.0% Financials.
Bernard Hosanna Shawana Jackson Brett Kinkopf Jonathan Kocon Chien-Ying Lee.
Information Technology Sector Stocks June 1st, 2010 Greg Price Greg Shaskus Min Shen Matt Sims Chris Stuart.
Consumer Discretionary Reza Aditya Hakan Altan Adam Barrick Peter Manuselis.
Consumer Staples Presentation August 4, 2009 Shane Connor Josh Drushel Jessica Kirwin.
Information Technology Stock Presentation Finance 724/824 SIM Class Summer 2009 Russell Kolmin Zachary McAllister Paul Melko Mahavir Sanghavi Daniel Schuerman.
Chapter 13 Equity Valuation 13-1.
Energy Sector Stock Recommendation March 2, 2010 Eric DeWees Honglei Gong Charles Hathaway Danqing Zhou.
Consumer Staples Company Presentation Des Dudaney Erica Elsasser Neil Hertenstein Mun Yi Se Tho May 18 th, 2010.
Consumer Discretionary Sector October 27 th, 2009 Tiffany Arnett, Pinjalim Bora, Sam Brickell.
G1 © Family Economics & Financial Education – Revised November 2004 – Investing Unit – Language of the Stock Market Funded by a grant from Take.
ConAgra Foods, Inc Bryna Fugate ACG Executive Summary  The company needs to raise their net income.  One good point is that they reduced the.
Consumer Staples Sector Laura Fillman Mary Kanet.
Financials David Kaplan, Nikhil Ketkar, Jonathan Khoury, Steve Kuljko.
STAPLES COMPANY VALUATION JACKIE PHAN LATRISHA SEARCY ANNA DAI.
Sector Presentation Sector: Materials Brian Mandel Minh Le Ellis Krienik.
Company Presentation June 1, 2010 Jiying Wang YongHui Wu.
Annual Report Project Starbucks Blake Hersch ACG2021 Sec. 080.
PREPARED BY: ASHLEY CLARK RICHARD GROSS JON HARMACEK OLGA ISENBERG BRYON JORDAN Industrial Sector Presentation.
Information Technology Finance 724/824 SIM Class Christopher Moran Suresh Ramasubramanian Sean Ramsey.
Consumer Staples: Stock Recommendations Robert Blake Jason Ebbing Rica Rahardjo.
1 Security Valuation and Analysis Macroeconomic/Industry Analysis Security valuation Ratio analysis MBA566: chapter
Industrials Stock Recommendation Bernard Hosanna Shawana Jackson Brett Kinkopf Jonathan Kocon Chien-Ying Lee.
FIN824 The Stock Market Financials Sector Kyle M. Ward-Dahl Marsel J. Tadger Ke Wang Adam J. Wilson 2/2/20101FIN824 The Stock Market.
1 Consumer Staples Sector Mark Bauer and Joe Burch May 1, 2006.
 Recommendation  Industry Information  Analysis ◦ Business ◦ Economic ◦ Financial ◦ Valuation  Summation and comments.
MCD (NYSE) MENGYU SUN JUNYING SHEN CHI ZHANG October 30,2012
Eric Hatch Christina Haubrock Melissa Hickey November 3, 2009.
Peter Clowes and Andrew Corwin
1 Consumer Staples Stock Recommendation Mark Bauer and Joe Burch May 15, 2007.
Consumer Discretionary Sector February 2 nd, 2010 Sekhar Achanta,Tongyu Zhou.
American Eagle Outfitters, Inc.
Fisher College of Business – Student Investment Management Materials Stock Analysis By Joshua Carter & Kyle Shaner.
Options Chapter 17 Jones, Investments: Analysis and Management.
 Fundamental Analysis By Martin Brenner. What is Fundamental Analysis?  A method of evaluating a security that entails attempting to measure its intrinsic.
Stock Analysis: Materials Andrew Givens March 6, 2007 Student Investment Management.
Consumer Discretionary Sector July 21, 2009 Joshua Anderson, Kunal Arora, Branyan Booth, Joseph Chandraraj.
Fisher College of Business – Student Investment Management Alcoa/Dow Chemical Analysis Theo Constantinou Vikram Rao Ryan Rettig.
GREG BRUNO, LISANDRO TSAI, DREW OSIKA, MEILING LIU Presented: November 11, 2010 MCDONALDS CORP.
Materials Sector November 24, 2009 Ellis Krienik, Minh Le, Brian Mandel.
John Goik John Glankler Christian Töpfner von Schütz John Goik John Glankler Christian Töpfner von Schütz Energy Sector Stock Recommendation.
1 Research term paper Five major sections: Company background / introduction Competitive strengths Financial analysis (focus section) Stock valuation analysis.
Sector Presentation: Consumer Discretionary
Student Investment Management BUSFIN 4228 Stocks Material Sector
Real Estate Stock Analysis
Analysts: Matthew Coyne and Jennifer Downing
Verizon Communications Inc.
Molson Coors (TAP): Overview Despite low single-digit volume decline (worldwide beer consumption down), current price reflects an overreaction.
Michael Korn Mario Knezevic Sashi Kommineni
Sector Presentation Consumer Staples
SIM Sector Presentation: Utilities Sector (S5UTIL)
The Stock Market.
Presentation transcript:

Stock Presentation Consumer Discretionary Sector November 17 th, 2009 Tiffany Arnett, Pinjalim Bora, Sam Brickell

Sector Recommendation Recap Short Term Hold on to the underweight position of the sector in the SIM portfolio. However, reshuffle the underlying composition. Long Term Depending on the positive organic sales growth in the 3 rd and the 4 th quarter, decide on increasing the weight to that of S&P 500

Currently, Consumer discretionary is underweight by 1.60% Current Sector weights & Composition

Current Sector Composition

Stock Recommendation Sell CoachMCD Buy DRI, 124 bps GME, 128 bps

Business:  McDonald’s: World’s largest fast-food restaurant chain  Coach: High-end accessories retailer Key Drivers:  MCD: Global expansion, increasing menu variety and value to the customer  COH: New designers to drive brand creativity Risks:  Both are in mature companies in competitive industries Coach & McDonald’s Corp

COH AbsoluteHighLowMedianCurrent P/Trailing E P/Forward E P/B P/S P/CF MCD Absolute HighLowMedianCurrent P/Trailing E P/Forward E P/B P/S P/CF MCD Relative to S&P 500 HighLowMedianCurrent P/Trailing E P/Forward E P/B P/S P/CF COH Relative to S&P 500 HighLowMedianCurrent P/Trailing E P/Forward E P/B P/S P/CF Coach & McDonald’s Corp – Valuation Analysis

COHMCD Relative to Industry MedianCurrentMedianCurrent P/Trailing E P/Forward E P/B P/S P/CF Coach & McDonald’s Corp – Valuation Analysis

 Both are fairly valued  Very little upside  Can use past profits from these to invest in better opportunities Why Sell Coach & McDonald’s Corp

Darden Restaurants – Business Analysis Business  Owns restaurants in North America. Red Lobster (690 restaurants) Olive Garden (691 restaurants) Longhorn Steakhouse (321 restaurants) The Capital Grille (37 restaurants) Bahama Breeze (24 restaurants) Seasons 52 (8 restaurants)  A small amount of franchising activity in other countries.

Darden Restaurants – Business Analysis Key Drivers  Same store sales (decreased 1.4%, compared to 5.6% for benchmark)  New store openings (71 in 2009, projected for 2010)  Relative Success of expansion of newer concepts - Bahama Breeze - The Capital Grille - Seasons 52

Darden Restaurants – Business Analysis Risks  Poor Sales (although not as dependent upon the state of the economy as you might think) - Poor sales could evolve out of many things though. Increased food costs (hedged somewhat by commodity contracts) Problems related to high level of indebtedness - Ratio of Consolidated Earnings from Continuing Operations to Fixed Charges is If problems arise the solution is simply to slow down building of new restaurants for a while.

Darden Restaurants – Financial Analysis  ROE is currently 25.4%, which is above median of 19.9%.  Operating Margin is currently 9.0%.  Net Profit Margin is 5.5%.  Current Ratio is 0.5.  Percentage LT debt to total capital reached a high immediately after the merger and has been decreasing at a steady rate ever since so they are being effective at working off their debt from the merger.

Darden Restaurants – Valuation Analysis o Price to Trailing Earnings is o Price to Forward Earning is o Price to Book is 2.7. o Price to Cash Flow is 6.6.  All of these are below the historical medians.

Darden Restaurants – Valuation Analysis  Currently P/E is  Median for past 5 years is 17.0, and Median for past 15 years is  Currently below it’s historical median point relative to industry, sector, and market.  So ratios likely to expand going forward to return to usual levels. Target Price  $39.81, stock currently trades at about $ (24% discount)

Darden Restaurants – Valuation Analysis

Darden Restaurants – Recommendation Buy 124 Basis Points of DRI. Primary Catalysts  Current P/E of 11.4  Increase in sales likely to come from an improving economy and improving consumer confidence.  Less investor concern about their debt as they work to decrease it.  Possible price floor from dividend yield (3.1% currently). Primary Risks  Possible liquidity problem due to the debt load.  Change in consumer’s tastes.

GameStop Corporation (Ticker: GME) Business  “World’s largest retailer of video game products and PC entertainment software”  Sell new and used video game hardware, software and accessories + PC entertainment software and other merchandise.  As of August , 6333 stores operating in US, Australia, Canada and Europe  Also, operate as the ecommerce platform and publish Game Informer - “industry’s largest multi-platform video game magazine in the United States based on circulation”.

Key Drivers  Unique used game trading platform.  Change in sales mix towards used video game products; higher margins.  Aggressive growth through acquisitions - Electronics Boutique(2005), Micromania(2008) GameStop Corporation (Ticker: GME)

Risks  Increasing gamer engagement by video game publishers.  Business model not sustainable in the long run. High Correlation with economic indicators Consumer spending (R=0.92) Retail Sales (R=0.95) GDP ( R=0.72) GameStop Corporation (Ticker: GME)

Forecast slow but steady growth in profitability driven by growth in margins over a 5 year period Also growth in Australia and Canada “In a Q3 business update, GameStop (NYSE: GME) said it still sees Q3 EPSGME of $0.27-$0.33…”. – GameStop Corporation (Ticker: GME)

Currently, Consumer discretionary is underweight by 1.60% Final Sector weights & Composition

Consumer Discretionary Sector Presentation Questions & Discussion

McDonalds Corporation (Ticker: MCD)

GameStop Corporation (Ticker: GME)