1. Stock Analysis Kristen Schulz, Bryan Gruenewald, and Connor Vredeveld

2. Parable of the Talents Matthew 25:14-30 It’s God-pleasing to make your money grow.

3. Raising Money in a Company Two ways to raise money: The company can borrow the money The company can raise money from investors As the company grows… So will corporate earnings and stock prices

4. Stocks equal Companies “I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” -Peter Lynch (net worth $352 million)

5. Different Markets Debt market: market where debt instruments are traded. Examples: notes, bonds, certificates, mortgages, leases, or other agreements between a lender and a borrower Equity market: market for trading equity instruments Stocks are securities that are a claim on the earnings and assets of a corporation Example: common stock shares, such as those traded on the New York Stock Exchange

6. Bonds Commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents. You can make money off bonds in two ways: 1. Price fluctuation 2. Interest payments (known as the coupon) throughout the life of a bond

7. Bonds: less risky Bond market returns are less volatile than stock market returns Should the company run into trouble, bondholders are paid first, before other expenses are paid.

8. Bonds “Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” -Suze Orman

9. Financial Statements All the financial data from a company can be found on their financial statement Three Financial Statements that are important to look at: 1. Balance Sheet 2. Income Statement 3. Statement of Cash Flows

10. Balance Sheet Purpose: to report the financial position of an accounting entity Assets: economic resources owned by the company Liabilities: company’s debts or obligations Stockholder’s equity: indicated the amount of finances proved by the owners of the business and earnings

11. Balance Sheet

12. Income Statement The Income Statement reports the accountant’s primary measure of performance of a business Operating section: discloses information about revenues and expenses that are a direct result of the regular business operations Non-operating section: discloses revenue and expense information about activities that are not tied directly to a company’s regular operations

13. Income Statement

14. Statement of Cash Flows This statement shows where cash comes and goes

15. Where can you get financial statements? You can get this information from the company’s website or other financial news sites such as Yahoo Finance or Morning Star

16. Sarbanes Oxley Act Act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations

17. Sarbanes Oxley Act Came in response due to the collapse of Enron, Worldcom, and other corporations

18. Sarbanes Oxley Act Worldcom

19. Stock Analysis ●What does a company do and how do they make their money? ○Company Profile ○Key Products and Brands

20. Coca-Cola’s Summary The Coca-Cola Company, a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. The company primarily offers sparkling beverages and still beverages. Its sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as carbonated energy drinks, and carbonated waters and flavored waters. The company’s still beverages comprise nonalcoholic beverages without carbonation, including noncarbonated waters, flavored and enhanced waters, noncarbonated energy drinks, juices and juice drinks, ready-to-drink teas and coffees, and sports drinks. It also provides flavoring ingredients, sweeteners, powders for purified water products, beverage ingredients, and fountain syrups. The Coca-Cola Company sells its products primarily under the Coca-Cola, Diet Coke, Coca-Cola Light, Coca-Cola Zero, Sprite, Fanta, Minute Maid, Powerade, Aquarius, Dasani, Glacéau Vitaminwater, Georgia, Simply, Del Valle, Ayataka, and I Lohas brand names. The company offers its beverage products through a network of company-owned or controlled bottling and distribution operators, as well as through independently owned bottling partners, distributors, wholesalers, and retailers. The Coca-Cola Company was founded in 1886 and is headquartered in Atlanta, Georgia.

21. Competitive advantage analysis is useful to determine what attributes a company has that give them advantages over competitors. It is useful to determine potential stability of a company. Competitive Advantage Analysis

22. ● The secret recipe for Coca-Cola, which arguably tastes better than other cola drinks. ● Their ability to continue developing new products and re-inventing old ones – Coca-Cola currently offers over 400 brands in 200 markets worldwide. ● The world’s most comprehensive distribution system has made Coca- Cola accessible to billions of people worldwide. Coca-Cola is often available in ample supply to people in areas where other consumer goods companies would never consider delivering their products. The African continent is an excellent example – it’s fairly common to see a small shop selling cold Coke in the middle of nowhere. ● Coca-Cola’s production techniques are so well developed that it costs a fraction of the selling price to manufacture their product, resulting in high profit margins.

23. Financial Ratio Analysis ●Financial ratios are based on a company’s financial statements. ●They can be used to help determine the financial outlook of a company. ○Health, profitability, growth, and value

24. Financial Health Analysis Debt-to-Equity Ratio The debt-to-equity ratio helps show the financial health of a stock by taking the total liabilities divided by total equity. A higher number indicates the company is financing their activities with debt instead of selling more stocks. Debt-to-Equity Ratio =Total Liabilities/Shareholders Equity

25. Profitability Analysis Net Profit Margin The ratio of net profits to revenues for a company or business segment, typically expressed as a percentage, that shows how much of each dollar earned by the company is translated into profits. Net margin is generally calculated as: =Net Profit/Revenue Return on Assets An indicator of how profitable a company is relative to its total assets. ROA gives the investor an idea as to how efficient a company is at using its assets to generate earnings. ROA is generally calculated as: =Net Income/Total Assets Return on Equity The amount of net income returned as a percentage of shareholders equity. ROE measures a corporation’s profitability by revealing how much a company generates with the money shareholders have invested. ROE is calculated as: =Net Income/Shareholder’s Equity

26. Financial Growth Analysis Earnings Per Share (EPS) The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Historical EPS data can reveal how much a company is growing. EPS =Net Income/Outstanding Common Shares

27. Price-to-Earnings (P/E) The price-to-earnings (P/E) ratio is a valuation ratio that can help determine the value of a company by comparing it with the stock’s historical P/E ratios and competitors’ P/E ratios. Valuation Analysis

28. Coca-Cola Analysis Coca-Cola’s Financial Data Financial Data2007200820092010201120122013 P/E RATIONA22.0819.4318.0613.2820.1920.48 ROE %30.94%27.51%30.15%42.32%27.37%28%26.68% (TTM) ROA %16.33%13.86%15.30%19.42%11.21%10.86%9.85% (TTM) Dividend Yield %NA3.36%2.88%2.68%2.69%2.81%2.80% YTD EPS$1.29$1.25$1.47$2.53$1.851.97$1.89 (Last Quarter) Net Margin %20.70%18.20%22.00%33.60%18.40%18.80%21.00% (Last Quarter) Debt to Equity.43.46.48.76.901.001.11 ( Last Quarter) Net Income7,2528,4468,2318,44910,15410,77910,627 (TTM)

29. Competition Comparison Direct Competitor Comparison KO Coca-Cola DPS Dr Pepper Snapple Group, Inc NSRGY Nestl PEP Pepsico, Inc Industry Beverages – Soft Drinks Market Cap:172.72B9.20B215.74B124.80B1.37B Employees:150,90019,000339,000278,0003.68K Qtrly Rev Growth (yoy):-0.03-0.010.050.020.14 Revenue (ttm):47.58B6.00B101.39B65.99B1.62B Gross Margin (ttm):0.60.580.480.530.45 EBITDA (ttm):13.13B1.29B19.21B12.42B197.70M Operating Margin (ttm):0.230.180.160.150.08 Net Income (ttm):8.60B610.00M11.56B6.64BN/A EPS (ttm):1.92.933.624.250.29 P/E (ttm):20.5115.4618.6219.0723.14 PEG (5 yr expected):2.321.924.112.221.85 P/S (ttm):3.61.522.111.881.85

30. Stock Analysis’Application to You You have the knowledge and ability to make your own investments. http://www.fool.com/investing/general/2013/04/16/ask-a-fool-should-i-learn-to-invest-on-my-own.aspx

31. Efficient Market Hypothesis Definition: all stocks are perfectly priced according to their inherent investment properties, the knowledge of which all market participants possess equally. All relevant information is reflected and incorporated in existing share prices.

32. What is the Missing Link? Everybody possesses the knowledge and ability to invest on their own, but an individual’s ATTITUDE is the key to success. Studies have shown that individual investors have not been successful. (DALBAR study) This frightening result is based almost exclusively on investors being unable to control their emotions.

33. Captain Kirk vs. Spock Captain Kirk-- instinctive decisions Spock-- uses reason and discipline in his decision making In the long term, Spock > Captain Kirk, every time.

34. Creating Your Own Investment Portfolio 1. Consider your goals. 2. Achieve the portfolio designed in step 1. 3. Re-evaluate and rebalance your portfolio periodically. Most importantly, maintain a level head throughout the process.

35. Consider Your Goals Determine the appropriate asset allocation for you. Based on an individual’s personality, risk tolerance, and life outlook. These factors will determine the makeup of your portfolio.

36. Build Your Portfolio Using analysis techniques, begin selecting the stocks, bonds, mutual funds, and ETF’s you want to make up your portfolio.

37. Re-evaluation and Rebalancing Maintain diversification. For example, stocks can vary between growth and value companies, ranging across sizes, market sectors, and countries.

38. Questions?