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For this assignment, assume the role of a newly hired equity analyst in an investment bank. Your boss has asked you to use your financial background to recommend three stocks to company investors. You are to:
Select three publicly traded companies to research.
Important: You may not choose Ford Motor Company or Microsoft Corporation.
Calculate the identified financial ratios for each company.
Summarize the findings on your selected companies’ performance in a 4–5 page report.
Information Gathering
After identifying the three companies you want to research, you will need to obtain financial information on them to calculate the required financial ratios:
Access the MarketsLinks to an external site. section of the Wall Street JournalLinks to an external site.:
Enter the stock symbol for the first of your selected companies in the Search bar in the upper right corner of the page.
Click on More Company Research.
Click on the Financials tab to obtain the income statement, balance sheet, and cash flow documents for your selected companies.
In the drop-down box that appears, click on Income Statement, Balance Sheet, and Cash Flow to obtain these financial documents for your selected company.
Repeat this process for your other two selected companies.
Click on the Research & Ratings tab to obtain the company’s closing stock price for the last day of the financial statement reporting period for use in your assignment.
Click on Historical Prices in the drop-down box that appears.
Enter the starting and ending dates for the most recent fully reported year (for example, start date = 01/01/2020; end date = 12/31/2020) to the left of the Go tab in the middle of the page.
Click on Download a Spreadsheet on the right-hand side of the page.
Note the company’s stock closing price for the last day of the financial statement reporting period for use in your assignment.
Repeat this process for your other two selected companies.
Use Reuters Markets & Finance NewsLinks to an external site. to obtain industry averages for each of your selected companies:
Click the magnifying glass search icon on the upper right side of the page.
Enter your first selected company’s name.
Click on the Companies tab.
Click on the Financials tab.
Repeat this process for your other two selected companies.
Note: You may use other websites to gather financial information for your selected companies if you are more familiar with them. Examples include:
Finviz.com – Stock ScreenerLinks to an external site..
MarketWatchLinks to an external site..
Google FinanceLinks to an external site..
Instructions
Write a 4-5 page report, summarizing the findings of your financial analysis, in which you:
Perform the required financial calculations for each of your selected companies correctly:
Price-earnings ratio (for earnings per share (EPS), use the diluted EPS total).
Operating margin.
Net profit margin.
Return on equity.
Current ratio.
Quick ratio.
Revenue growth for the past five years.
Long-term debt to equity.
Analyze each firm’s performance against the industry average, considering all critical aspects necessary to assess company performance.
Be sure to comment on each firm’s strengths and weaknesses.
Advise investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your well-supported stock valuation experience.
Recommend to investors the prices at which they should buy or sell these stocks and provide a rationale for all recommendations.
Remember: A buy recommendation means you are expecting prices to rise; a sell recommendation means you are expecting prices to fall.
Determine your first profit target and the recommended risk tolerance level for each stock and provide a rationale for your recommendations.
Remember: Your recommended risk tolerance level is the price at which investors should sell the stocks if the market goes against them.
Summarize the current market sentiment for your selected stocks along with a five-year outlook, based on accurate data points.
Use three sources to support your writing.
Choose sources that are credible, relevant, and appropriate.
Cite each source listed on your source page at least one time within your assignment.
Access the Strayer University Library or review library guides for help with research, writing, and citation.
Formatting
This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions. Note the following:
The preferred method is for your paper to be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
Use headers to highlight each topic (Financial Ratios, Performance Against Industry Average, Buy and Sell or Hold Decision, and so on).
Include a cover page containing the assignment title, your name, your professor’s name, the course title, and the date. The cover page is not included in the required page length.
Include a source list page. Citations and source list entries must follow SWS format. The source list page is not included in the required page length.
Learning Outcomes
The specific course learning outcome associated with this assignment is:
Evaluate stocks by computing, comparing and contrasting ratios, and analyzing the performance of the stocks versus the industry averages.
View RubricWeek 4 Assignment – Ratio AnalysisWeek 4 Assignment – Ratio AnalysisCriteriaRatingsPtsPerform the required financial calculations for each of your selected companies correctly.62.5 to >56.24 ptsExemplaryPerformed the required financial calculations for each of your selected companies correctly.56.24 to >49.99 ptsCompetentPerformed the required financial calculations for each of your selected companies but omitted one or two required calculations and/or made one or two calculations incorrectly.49.99 to >43.74 ptsSatisfactoryPerformed the required financial calculations for each of your selected companies but addressed only two of the three companies, omitted three or four required calculations and/or made three or four calculations incorrectly.43.74 to >37.49 ptsNeeds ImprovementAttempted to perform the required financial calculations for each of your selected companies but addressed only one of the three companies, omitted five or more required calculations, and/or made five or more calculations incorrectly.37.49 to >0 ptsUnacceptableDid not perform the required financial calculations for any of your selected companies./ 62.5 ptsAnalyze each firm’s performance against the industry average, considering all critical aspects necessary to assess company performance.37.5 to >33.74 ptsExemplaryAnalyzed each firm’s performance against the industry average, considering all critical aspects necessary to assess company performance.33.74 to >29.99 ptsCompetentAnalyzed each firm’s performance against the industry average but did not consider one or two critical aspects necessary to assess company performance.29.99 to >26.24 ptsSatisfactoryAnalyzed each firm’s performance against the industry average but addressed only two of the three companies and/or did not consider three or four critical aspects necessary to assess company performance.26.24 to >22.49 ptsNeeds ImprovementAttempted to analyze each firm’s performance against the industry average, but addressed only one of the three companies and/or did not consider five or more critical aspects necessary to assess company performance.22.49 to >0 ptsUnacceptableDid not analyze any firm’s performance against the industry average/ 37.5 ptsAdvise investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your well-supported stock valuation experience.37.5 to >33.74 ptsExemplaryAdvised investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your well-supported stock valuation experience.33.74 to >29.99 ptsCompetentAdvised investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your stock valuation experience, but recommendations were based on one inaccurate or unsupported assumption.29.99 to >26.24 ptsSatisfactoryAdvised investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your stock valuation experience, but addressed only two of the three stocks; documented the rationale for only two of the stock recommendations; and/or recommendations were based on two inaccurate or unsupported assumptions.26.24 to >22.49 ptsNeeds ImprovementAttempted to advise investors whether to buy and hold or sell these stocks based on your companies’ current stock prices, products and services, and your stock valuation experience, but addressed only one of the three stocks; advice considered some of the factors (current stock prices, products and services, and your stock valuation experience), but not all three; documented the rationale for only one of the stock recommendations; and/or recommendations were based on three or more inaccurate or unsupported assumptions.22.49 to >0 ptsUnacceptableDid not advise investors whether to buy and hold or sell any stocks./ 37.5 ptsRecommend to investors the prices at which they should buy or sell these stocks and provide a rationale for all recommendations.25 to >22.49 ptsExemplaryRecommended to investors the prices at which they should buy or sell these stocks and provided a rationale for all recommendations.22.49 to >19.99 ptsCompetentRecommended to investors the prices at which they should buy or sell these stocks, but based the recommendations on one incorrect or unsubstantiated assumption.19.99 to >17.49 ptsSatisfactoryRecommended to investors the prices at which they should buy or sell these stocks, but recommended prices for only two of the three stocks; provided a rationale for only two of the recommendations; and/or based the recommendations on two incorrect or unsubstantiated assumptions.17.49 to >14.99 ptsNeeds ImprovementAttempted to recommend to investors the prices at which they should buy or sell these stocks, but recommended prices for only one of the three stocks; provided a rationale for only one of the recommendations; and/or based the recommendations on three or more incorrect or unsubstantiated assumptions.14.99 to >0 ptsUnacceptableDid not recommend to investors the prices at which they should buy or sell these stocks./ 25 ptsDetermine your first profit target and the recommended risk tolerance level for each stock and provide rationale for all recommendations.25 to >22.49 ptsExemplaryDetermined your first profit target and the recommended risk tolerance level for each stock with rationale.22.49 to >19.99 ptsCompetentDetermined your first profit target and the recommended risk tolerance level for each stock, but recommendations were based on one inaccurate or unsupported assumption.19.99 to >17.49 ptsSatisfactoryDetermined your first profit target and the recommended risk tolerance level for each stock but addressed the first profit target and recommended risk tolerance level for only two of the three stocks; documented the rationale for only two of the recommendations; and/or based the recommendations on two inaccurate or unsupported assumptions.17.49 to >14.99 ptsNeeds ImprovementAttempted to determine your first profit target and the recommended risk tolerance level for each stock, but addressed the first profit target or the recommended risk tolerance level but not both; addressed the first profit target and recommended risk tolerance level for only one of the three stocks; documented the rationale for only one of the recommendations; and/or based the recommendations on three or more inaccurate or unsupported assumptions.14.99 to >0 ptsUnacceptableDid not determine your first profit target and the recommended risk tolerance level for each stock./ 25 ptsSummarize the current market sentiment for your selected stocks along with a five-year outlook, based on accurate data points.25 to >22.49 ptsExemplarySummarized the current market sentiment for your selected stocks along with a five-year outlook, based on accurate data points.22.49 to >19.99 ptsCompetentSummarized the current market sentiment along with a five-year outlook but based the summary and outlook on one inaccurate data point.19.99 to >17.49 ptsSatisfactorySummarized the current market sentiment and a five-year outlook for only two of the selected stocks and/or based the summary and outlook on two inaccurate data points.17.49 to >14.99 ptsNeeds ImprovementAttempted to summarize the current market sentiment for your selected stocks along with a five-year outlook but addressed either the current market sentiment or the five-year outlook but not both; addressed the current market sentiment and a five-year outlook for only one of the selected stocks; based the summary and outlook on three or more inaccurate data points.14.99 to >0 ptsUnacceptableDid not summarize the current market sentiment for your selected stocks along with a five-year outlook./ 25 ptsUse three sources to support your writing.12.5 to >11.24 ptsExemplaryExceeds the required number of references; all references are high-quality choices.11.24 to >9.99 ptsCompetentMeets the required number of references; all references are high-quality choices.9.99 to >8.74 ptsSatisfactoryDoes not meet the required number of references; some references are poor-quality choices.8.74 to >7.49 ptsNeeds ImprovementDoes not meet the required number of references; all references are poor-quality choices.7.49 to >0 ptsUnacceptableNo references provided./ 12.5 ptsClarity, writing mechanics, and formatting requirements.25 to >22.49 ptsExemplary0–2 errors present.22.49 to >19.99 ptsCompetent3–4 errors present.19.99 to >17.49 ptsSatisfactory5–6 errors present.17.49 to >14.99 ptsNeeds Improvement7–8 errors present.14.99 to >0 ptsUnacceptableMore than eight errors present./ 25 ptsTotal Points: 0
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