Business Valuation -- Business Strategy Analysis
This section will look at recommended sources and strategies for the following about a company:
- Operational Practices
- Strategic Analysis
- Management and Ownership
- Industry conditions and outlook
- Competitors
- Macroeconomic Data
Corporate Web Site
The current regulatory environment of full corporate disclosure has made public company corporate web sites a rich source of information. Your research should always begin with looking at the Investors Relations or Company Info sections of the company's web site.
You can expect to find:
- Description of Business Segments/Branding
- Archived Annual Reports - usually in .pdf
- Archived SEC Filings - often in Word, .pdf, and Excel
- Financial Highlights - often represented by graphs or charts; often includes Reporting Calendar, expected financial news release dates for current fiscal year
- Stock Performance - includes stock split history, dividends, and analyst coverage; more and more sites are including options to display historical prices;
- Archived Press Releases
- Top Management, Board, and Other Committee Member Profiles
- Analyst Conference Calls and Webcasts
Product and Geographic Segmentation
- Includes companies traded on all exchanges
- Enter Ticker Symbols in "Get up to 10 Quotes" box
- Click on Summary Quote link
- Scroll down to Company Description
- Clicking on the "more" link displays the 10K Business description section (Item 1)
Standard & Poor's Stock Reports
- "Business Summary" section of each company tearsheet includes an excellent text description of lines of business including breakdown of product and geographic segmentation
- 5+ years of annual key financial data broken down by product and geographic segmentation
- Companies>Financials>More>Worldscope Reports & Charts>Business Segment Review/Geographic Segment Review
Bloomberg
- Type Ticker Symbol<EQUITY>DES<GO>
- Product Segmentation = <PAGE DOWN> to Pg. 6
- Geographic Segmentation = <PAGE DOWN> to Pg. 7
STRATEGIC ANALYSIS
Corporate Strategies
Annual Report
The overall purpose of the Annual Report is more marketing and strategic
than financial in nature; provides insights into the company's plans
for successfully moving its products or services in the competitive
marketplace
- President's Letter to the Shareholders - contains an excellent discussion of the company's past year's operational, strategic, and financial performance and its top goals and strategies for the coming year
- Leadership - look for changes in top management; check out the biographies of new management to gain insight into the organization's future directions
Management Discussion & Analysis
(MD&A)
While focused more on the company's current and forecasted financial
performance, the underlying discussion on challenges, risks, and
improving the bottom line usually signal operational and strategic
plans.
- Located in: Annual Report and 10K (Part II, Item 7)
Marketline Business Information Centre (formerly Datamonitor)
Strategically-focused reports on 10,000+ companies; includes SWOT
analysis for the largest 1500
- Company Overview and Business Description
- Corporate History
- Major Products and Services
- Management Biographies
- SWOT Analysis
- Company View (Letter to the Shareholders)
Mintel
Company and industry market research reports on U.S. and international
consumer-based products and services. Includes:
- Market Drivers
- Market Size
- Market Segmentation
- Distribution Practices
Factiva
Locate articles from newspapers, wires, industry newsletters and
magazines for substantive discussions about your company, significant
events, management profiles, and strategic and financial challenges
and risks
- Suggested search strategy:
- hd=company name and hlp=strateg* and hlp=(plan* or challeng* or risk* or future* or chang* or future)
MANAGEMENT AND OWNERSHIP
10K and Proxy Statements
- Make up and biographies of corporate management team and board of directorships
- Institutional/Beneficial, Insider, and Mutual Fund ownership
- Companies>Ownership
INDUSTRY ANALYSIS
Standard
& Poor's Industry Surveys
Turn to this excellent resource to learn about the business landscape
in which the company performs and competes. Each report contains
a combination of industry-specific and macroeconomic data. Industry
research should always begin with this resource.
- One page analysis of current state of the industry from an economic and investment perspective
- Click on Lookup Industry link on left frame
- Click on .pdf link to Industry Commentary
Mintel and Reuters
Market research reports on U.S. and international companies and
products and services.
Marketline Business Information Centre (formerly Datamonitor)
Includes 2000+ industry profiles; strong non-U.S. representation
Factiva
Locate articles from newspapers, wires, industry newsletters and
magazines for substantive discussions about the industry, current
problems and challenges, regulatory and economic issues, and key
players.
- Suggested search strategy:
- Use Industry Lookup option at top of the search page to limit articles to your industry
- Free Text search box: hlp=(trend* or outlook or forecast* or challeng* or problem* or future* or risk* or compet* or market*)
COMPETITION
The following sources all identify a company's key strategic and financial competitors
- Industry and company peer analysis
- Ability to customize companies in peer set
- Companies>Peers>Financials/Performance/Earnings
Bloomberg
- Compare a company against its sector peers
- Allows you to determine relative value on a total return basis
- Type Ticker Symbol<EQUITY>RV<GO>
- To view data in a graph, type Ticker Symbol<EQUITY>COMP<GO>
Standard
& Poor's Industry Surveys
Identifies the key competitors for each industry and includes comparative
financial analysis
Investext
Wall Street financial analysis on companies and their industries
MACROECONOMIC DATA
Consumer
Confidence
Consumer Price Index
Corporate Bond Yields
Economic Growth
Federal Funds Rate
Foreign Exchange
Rates
Gross Domestic Product (GDP)
Gross National Product (GNP)
Inflation
Jobless Claims
LIBOR
Mortgage Interest Rates
Prime Rate
Trade Deficit (Balance of
Payments)
Unemployment Rates
U.S. Government Securities
Wholesale Prices (Producer
Price Index/PPI)
The
Conference Board
University of Michigan Consumer
Sentiment Index
Released the 15th and last day of each month, this data is only
available to subscribers, but is picked up by wires and newspapers.
It is included on many of the Economic Calendars referenced above.
Definition: Data gathered from regular surveys of households
is often seen as a gauge in patterns and shifts in consumer spending.
Bureau of Labor Statistics
CPI page
Also available in FRED
II
Definition: Also known as the cost-of-living index,
this is a government index that measures changes in the price of
typical consumer goods
National
Income and Product Tables
Data gathered by the Bureau of
Economic Analysis. Often asked for as annual percentage change
in Gross Domestic Product (GDP)
Federal
Reserve Board's Foreign Exchange Rates
This data is reported on a daily, weekly, and monthly basis in this
release. Monthly and annual average data is reported in the Economic
Indicators and the Economic
Report of the President. All of the data is also available in
FRED II.
National
Income and Product Accounts Tables
Data gathered by the Bureau of
Economic Analysis
Also available in FRED
II
Definition: The total market value of all final goods and
services produced in a country in a given year, equal to total consumer,
investment and government spending, plus the value of exports, minus
the value of imports
National
Income and Product Accounts Tables
Data gathered by the Bureau of
Economic Analysis
Also available in FRED
II
Definition: Total output of the U.S. economy; GNP measures
the production of all Americans, wherever they happen to be working
Bureau of Labor
Statistics Inflation page
Often referred to as the percentage of change in the Consumer Price
Index (CPI)
Also available in FRED
II
Definition: A persistent increase in the level of consumer
prices or a persistent decline in the purchasing power of money,
caused by an increase in available currency and credit beyond the
proportion of available goods and services
- U.S. Government Securities
- Prime Rate
- Federal Funds Rate
- Corporate Bond Yields
- LIBOR (London Inter bank Offer Rate)
Federal
Reserve Board's Selected Interest Rates
This weekly release is the source for the first four of the above
interest rates. The data is reported on a daily, weekly, and monthly
basis.
Announcements about changes in the Federal Funds Rate are posted in the meeting minutes of the Federal Open Market Committee. It changes daily and is a sensitive indicator of general interest rate trends.
Monthly and annual average data is reported in the Economic Indicators and the Economic Report of the President. All of the data is also available in FRED II.
The British Bankers Association is the originating source for the LIBOR rate. All of the rates are available dating back 1987.
Department
of Labor's Newsroom
Numbers are released in weekly press
Definition: Number of new applications for unemployment
benefits; often used as an short-term indicator of the health of
the economy
Mortgage
Interest Rates
Available in FRED
II
Trade Deficit (Balance of Payments)
Trade
and Industry Data
Data gathered by the International
Trade Administration
-Also available in FRED
II
Definition: A country's balance of payments is the
quantity of its own currency flowing out of of the country minus
the amount flowing in
Current
Population Survey
Data gathered by the Bureau of
Labor Statistics
Also available in FRED
II
Definition: Percentage of employable people actively
seeking work, out of the total number of employable people
Wholesale Prices (Producer Price Index, PPI)
Producer Price Index
Data gathered by the Bureau of Economic
Analysis
Also available in FRED
II
Definition: A government index that measures changes
in price at the wholesale level. Since producers pay for things
that will eventually end up being consumed by somebody later, the
PPI is considered an indicator of what's ahead in terms of inflationary
pressures
