投资学全英文8综述课件

Chapter7Analyzing

CommonStocksAnalyzingCommonStocksLearningGoalsDiscussthesecurityanalysisprocess,includingitsgoalsandfunctions.Understandthepurposeandcontributionsofeconomicanalysis.Describeindustryanalysisandnotehowitisused.Demonstrateabasicappreciationoffundamentalanalysisandwhyitisused.AnalyzingCommonStocksLearningGoals(cont'd)Calculateavarietyoffinancialratiosanddescribehowfinancialstatementanalysisisusedtogaugethefinancialvitalityofacompany.Usevariousfinancialmeasurestoassessacompany’sperformance,andexplainhowtheinsightsderivedfromthebasicinputforthevaluationprocess.WhatisSecurityAnalysis?“Theprocessofgatheringinformation,organizingitintoalogicalframework,andthenusingittodeterminetheintrinsicvalueofashareofcommonstock.”WhatisIntrinsicValue?IntrinsicValueTheunderlyingorinherentvalueofastock,asdeterminedthroughfundamentalanalysisAprudentinvestorwillonlybuyastockifitsmarketpricedoesnotexceedwhattheinvestorthinksthestockisworth.Intrinsicvaluedependsuponseveralfactors:EstimatesoffuturecashflowsDiscountrateAmountofrisk“TopDown”Approachto

TraditionalSecurityAnalysisStep1:EconomicAnalysisStateofoveralleconomyStep2:IndustryAnalysisOutlookforspecificindustryLevelofcompetitioninindustryStep3:FundamentalAnalysisFinancialconditionofspecificcompanyHistoricalbehaviorofspecificcompany’sstockEfficientMarketHypothesisEfficientMarket:theconceptthatthemarketissoefficientinprocessingnewinformationthatsecuritiestradeveryclosetoorattheircorrectvaluesatalltimesEfficientmarketadvocatesbelieve:Securitiesarerarelysubstantiallymispricedin

themarketplaceNosecurityanalysisiscapableoffindingmispricedsecuritiesmorefrequentlythanusingrandomchanceWhoNeedsSecurityAnalysisinanEfficientMarket?Fundamentalanalysisisstill

importantbecause:AllofthepeopledoingfundamentalanalysisisthereasonthemarketisefficientFinancialmarketsmaynotbeperfectlyefficientPricingerrorsareinevitableStep1:EconomicAnalysisEconomicAnalysisisthestudyofgeneraleconomicconditionsthatisusedinthevaluationofcommonstock.Stockpricesareheavilyinfluencedbythestateoftheeconomyandbyeconomiceventsonbothaglobalanddomesticbasis.Thebehavioroftheeconomyiscapturedinthebusinesscycle,whichreflectschangesintotaleconomicactivityovertimeKeyEconomicMeasuresGrossDomesticProduct(GDP):marketvalueofallgoodsandservicesproducedinacountryovertheperiodofayearGenerally,asGDPgoestheeconomygoesIndustrialProduction:measureoftheactivity/outputintheindustrialorproductivesegmentoftheeconomyGenerally,asproductiongoestheeconomygoesKeyEconomicFactorsthatAffecttheBusinessCycleGovernmentFiscalPolicyTaxesGovernmentspendingDebtmanagementMonetaryPolicyMoneysupplyInterestratesOtherFactorsInflationConsumerspendingBusinessinvestmentsForeigntradeCurrencyexchangeratesOtherKeyEconomicMeasuresEconomicMeasure WhatItTracksIndexofLeadingIndicators “Predicts”directionofGDPPersonalIncome ConsumerbuyinghabitsRetailSales ConsumerattitudesMoneySupply Growthofeconomy&inflationConsumerPrices/ Inflation

ProducerPricesEmployment BusinessProductionHousingStarts Availability&costofmoneyTable7.2

EconomicVariablesandtheStockMarketSourcesforEconomicOutlookWallStreetJournalBarron’sFortune,BusinessWeek,ForbesGovernmentPublicationsBrokeragefirm/commercialbankreportsHowDoWeUsetheEconomicOutlook?Useittoidentifyareasfor

additionalresearchWhatindustrieswillbenefit?Whatindustrieswillbehurt?UseittoevaluateindividualcompaniesWillsales/profitsgoupordown?ImportantPointtoRemember!StockpricesusuallychangebeforetheactualforecastedchangesbecomeapparentintheeconomyStockpricetrendsareanotherleadingindicatoroftenusedtohelppredictthedirectionoftheeconomyitselfStep2:IndustryAnalysisEvaluatethecompetitivepositionofaparticularindustryinrelationtootherindustriesLookingfornewopportunities&growthpotential IdentifycompanieswithintheindustrythatlookpromisingLookingforstrongmarketpositions,pricingleadership,economiesofscale,etc.

IssuesthatAffectanIndustryWhatisthenatureoftheindustry?Istheindustryregulated?Whatroledoeslaborplayintheindustry? Howimportantaretechnologicaldevelopments?Whicheconomicforceshavethemostimpactontheindustry(e.g.,interestrates,foreigntrade)?Whataretheimportantfinancialandoperatingconsiderations(e.g.,accesstocapital)?

GrowthCycleStages

andInvestmentsGrowthCyclereflectsthevitalityofanindustryoracompanyovertime.InitialDevelopment:industryisnewandrisksareveryhighRapidExpansion:productacceptanceisgrowingandinvestorsbecomeveryinterestedMatureGrowth:expansioncomesfromgrowthintheeconomyandreturnsaremorepredictableStabilityorDecline:demandforproductisdiminishingandinvestorsavoidthisstageSourcesforIndustryOutlookTradepublicationsWallStreetJournalFortune,BusinessWeek,ForbesStandard&Poor’sIndustrySurveysBrokeragehousereportsYahoo!FStep3:FundamentalAnalysisEvaluatethefinancialconditionandoperatingresultsofaspecificcompanyCompetitivepositionCompositionandgrowthinsalesProfitmarginsanddynamicsofearningsAssetmix(i.e.cashbalance,inventory,accountsreceivable,fixedassets)Financingmix(i.e.debt,stock)ThevalueofastockisinfluencedbythefinancialperformanceofthecompanythatissuedthestockWhereDoWeStart?InterpretingFinancialStatementsUsingFinancialRatiosFundamentalanalysisisoftenthemostdemandingandmosttime-consumingphaseofstockselectionFinancialStatements:

TheBalanceSheetSummaryofacompany’sassets,liabilities,andshareholders’equityatapointintimeAssets:whatthecompanyowns(i.e.cash,inventory,accountsreceivable,equipment,buildings,land)Liabilities:whatthecompanyowes(i.e.bills,debt)Equity:capitalthestockholdershaveinvestedin

thecompanyWhatarewelookingforonthebalancesheet?Relativeamounts(largevs.small)Trends(improvingvs.decreasing)Table7.3CorporateBalanceSheetFinancialStatements:

TheIncomeStatementSummaryofacompany’soperatingresultsoveraspecificperiodoftime,usuallyoneyearRevenues:fundsreceivedforprovidingproductsand/orservicesExpenses:fundsusedtopayformaterials,labor,andotherbusinesscostsProfit/Loss:revenueslessexpensesWhatarewelookingforontheincomestatement?Relativeamounts(largevs.small)Relationships(Areexpensesgrowingfasterorslower

thanrevenues?)Trends(improvingvs.decreasing)Table7.4CorporateIncomeStatementFinancialStatements:

TheStatementofCashFlowsSummaryofacompany’scashflowsandothereventsthatcausedchangesincompany’scashSourcesofCash:proceedsfromsaleofproducts/services,salesofequipment,borrowingmoney,saleofstockUseofCash:paymentofwagesand/ormaterials,paymentofoperatingexpenses,purchasesofequipment,paymentofdebt,paymentofdividendsWhatarewelookingforonthecashflowstatement?Relativeamounts(morecashorlesscash)LiquidityTrends(improvingvs.decreasing)Table7.5StatementofCashFlowsSourcesforFinancialStatementsCompany’sAnnualReportCompany’s10KCompany’s10QSecurities&ExchangeCommission

Standard&Poor’sorMoodyReportsInternetfinancialportalsBrokeragefirmreportsKeyFinancialRatiosStudyoftherelationshipsbetweenfinancialstatementaccountsPurposeistodevelopinformationaboutthepastthatcanbeusedtogetahandleonthefuture“X-rays”ofthefinancialstatementstolookformeaningfulrelationshipsbetweennumbersLooksatcompany’shistoricaltrendstoseeifimprovingordecliningLooksatindustrystandardstoseehowcompanycomparestocompetitorsMajorGroupsofFinancialRatiosLiquidityRatios:thecompany’sabilitytomeetday-to-dayoperatingexpensesandsatisfyshort-termobligationsastheybecomedueActivityRatios:howwellthecompanyismanaging

itsassetsLeverageRatios:amountofdebtusedbythecompanyProfitabilityRatios:measureshowsuccessfulthecompanyisatcreatingprofitsCommonStockRatios:convertskeyfinancialinformationintoper-sharebasistosimplifyfinancialanalysisLiquidityRatiosCurrentRatio:howmanydollarsofshort-termassetsareavailableforeverydollarofshort-termliabilitiesowedHigherratio:moreliquidityLowerratio:lessliquidityLiquidityRatios(cont'd)NetWorkingCapital:howmanydollarsofworkingcapitalareavailabletopaybillsandgrowthebusinessHigheramounts:firmmakeslargeinvestmentsinworkingcapitalLoweramounts:firmsoperateswithlessworkingcapitalActivityRatiosAccountsReceivableTurnover:howquicklythecompanyiscollectingitsaccountsreceivable(salestocustomersoncredit)Higherratio:betterLowerratio:worseActivityRatios(cont’d)InventoryTurnover:howquicklythecompanyissellingitsinventoryHigherratio:betterLowerratio:worseActivityRatios(cont'd)TotalAssetTurnover:howefficientlythecompanyisusingitsassetstosupportsalesHigherratio:betterLowerratio:worseLeverageRatiosDebt-EquityRatio:howmuchdebtthecompanyisusingtosupportitsbusinesscomparedtohowmuchstockholders’equityitisusingtosupportitsbusinessHigherratio:moreriskLowerratio:lessriskLeverageRatios(cont'd)TimeInterestEarned:measurestheabilityofthefirmtomeetitsfixedinterestpaymentsHigherratio:lessriskLowerratio:moreriskProfitabilityRatiosNetProfitMargin:amountofprofitearnedfromsalesandotheroperationsHigherratio:betterLowerratio:worseProfitabilityRatios(cont'd)ReturnonAssets:amountofprofitearnedoneachdollarinvestedinassets;measuresmanagement’sefficiencyatusingassetsHigherratio:betterLowerratio:worseProfitabilityRatios(cont'd)ReturnonEquity:amountofprofitearnedoneachdollarinvestedbystockholders;measuresmanagement’sefficiencyatusingstockholders’fundsHigherratio:betterLowerratio:worseBreakingDown

ReturnonAssets(ROA)BreakingdownROAallowsinvestorstoidentifythecomponentsthataredrivingcompanyprofits.InvestorswanttoknowifROAismovingup(ordown)becauseofimprovement(ordeterioration)inthecompany’sprofitmarginand/oritstotalassetturnover.BreakingDown

ReturnonAssets(ROA)(cont'd)BreakingdownROEallowsinvestorstoidentifytheimpactoffinancialleverageoncompanyreturn.InvestorswanttoknowifROEismovingup(ordown)becauseofhowmuchdebtthecompanyisusingorbecauseofhowthefirmismanagingitsassetsandoperations.CommonStockRatiosPrice/EquityRatio:showshowthestockmarketispricingthecompany’scommonstockOneofthemostwidelyusedratiosincommonstockselectionOftenusedinstockvaluationmodelsHigherratio:moreexpensiveLowerratio:lessexpensiveCommonStockRatios(cont'd)WhatistheP/Eratioforacompanywithprofitsof$139.7million,61,815,000outstandingsharesofcommonstockandacurrentmarketpriceof$41.50pershare?CommonStockRatios(cont'd)Price/EarningsGrowthRatio(PEG):comparescompany’sP/EratiototherateofgrowthinearningsRatio > 1: stockmaybefullyvaluedPEG = 1: stockpriceinlinewithearningsgrowthRatio < 1: stockmaybeundervaluedCommonStockRatios(cont'd)Dividendspershare:theamountofdividendspaidouttocommonstockholdersCommonStockRatios(cont'd)PayoutRatio:howmuchofitsearningsacompanypaysouttostockholdersintheformofdividendsTraditionalpayoutratioshavebeen40%to60%Recenttrendshavebeenlowerpayoutratios,withmoretaxefficientstockbuybackprogramsusedfrequentlyHighpayoutratiosmaybedifficulttomaintainandthestockmarketdoesnotlikecutsindividendsCommonStockRatios(cont'd)BookValueperShare:differencebetweenassetsandliabilities(equity)pershareAcompanyshouldbeworthmorethanitsbookvalue.CommonStockRatios(cont'd)Price-to-BookRatio:comparesstockpricetobookvaluetoseehowaggressivelythestockisbeingpricedHigherratio:stockisfully-pricedoroverpricedLowerratio:stockmaybefairlypricedorunderpricedInterpretingFinancialRatiosSourcesofRatioAnalysis

Standard&Poor’sStockReportsBrokeragefirmreports

ValueLineReportsFigure7.1AnExampleofaPublishedReportwithFinancialStatistics(Source:Mergent,July25,2012.©2012)InterpretingFinancialRatiosLookathistoricalratiotrendsforthecompanyLookatratiosfortheindustryEvaluatethefirmrelativetotwoorthreemajorcompetitorsTrytodetermineifthefinancialinformationistellingyouagoodstoryaboutthecompanyorabadstoryUsethestorytodecideifyouthinkthestockhasintrinsicvalueforyouasaninvestorC