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Overview
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 Markets section of the Wall Street Journal:https://www.wsj.com/news/markets?mod=nav_top_section
- 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.
Note: You may use other websites to gather financial information for your selected companies if you are more familiar with them.
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 (Week 4 Assignment – Ratio Analysis):
- 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 (Week 4 Assignment – Ratio Analysis).
- 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 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 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.