Learning Goal: I’m working on a finance project and need the explanation and answer to help me learn.
The analysis of the allocated company relative to its peers. As an analyst, your analysis would also involve investigating the sub-industry in which the company is operating in order to construct your expectations. I urge you to investigate your company and conduct your due diligence in order to reach superior analysis. I must be clear, the individual project does not involve copying and pasting the company’s annual reports. It should involve your own analysis of the company relative to its peers given your constructed assumptions. Attached is a document that demonstrates some of the important information that can be included in your company analysis. Chapter 2 of the textbook would be a useful read. Besides the company overview/analysis, remember that you are the analyst. You should be making sense of all the information available whether in annual reports, competitors annual reports, news. For example: what is your view of the sub-industry? How is your company doing relative to its peers? What is the companys beta given your assumptions on the market risk premium (so forward looking market risk premium can be calculated using your assumptions on the economy and the beta can be calculated, the inclass exercises on Topic 3 that we did + the stata exercise could be helpful), what valuation should we have for this companys stock? How does its price look like relative to its value? What about relative to peers? These are just some examples of some of the things that can be included in your report. By the end, of the report we should have a buy vs sell recommendation for your assigned company’s equity.
