Mini Equity Research Report [WLO: 4] [CLOs: 1, 2, 3, 4]
Many investment banks employ analysts to write equity research reports on public companies to advise their clients on their stock investments. In many cases, an initial equity research report is 20 to 50 pages long! For this class, you will focus on only three of the many important sections typically included in an equity research report. Thankfully, your Mini Equity Research Report will be much shorter than those published by investment banks!
In Week 1, you chose a publicly traded company to use throughout this class for the Mini Equity Research Report. In the first section of the Mini Equity Research Report, you evaluate the historical financial performance of the company (Week 1). In the second section of the Mini Equity Research Report, you evaluate the company’s performance using common financial ratios, and you compare the company to the competitor’s performance with the same financial ratios (Week 2). Finally, in Sections 3 and 4 of the report, you develop a value for the company’s stock and compare your value to the current market price of the stock (Weeks 3 and 4). Based on the analysis you present in these four sections, you will develop your recommendation to buy, hold, or sell the stock of this company.
It is very rare for one company to have only positive facts. Most companies have some good facts and some weak facts. In Sections 1 and 2 of the Mini Equity Research Report, you will analyze a variety of financial data for your selected company. As the equity analyst, it is your responsibility to combine the positive and negative facts into one recommendation (buy, hold, or sell). It is important to consider the importance of each fact and acknowledge that there is no perfect answer. Your recommendation should be based on the strength of the positive facts while recognizing the risks from the negative facts.
This week, you will write the introduction (including your stock recommendation) and the conclusion of the Mini Equity Research Report. In addition, you will revise the four sections from the first four weeks of class and combine them into this Mini Equity Research Report. Finally, you will submit your final Appendices A, B, C, and D with the Mini Equity Research Report.
Prepare:
Prior to beginning work on this final project,
Complete the Week 5 – Learning Activity: Understanding Cost of Capital.
Review the feedback you have received on your assignments throughout this course.
Locate and revise (if necessary) all of your assignments from Weeks 1 through 4.
State the name of the company and a brief description of what it does.
State the current market price per share and total market capitalization of the company.
State two key historical financial performance facts about your company (you can ascertain this information from your Week 1 – Assignment 3, Section 1: Financial Statement Analysis).
Categorize the overall financial performance as strong, neutral, or weak.
Summarize (briefly) the ratio performance of the company.
Justify your assessment based on the key facts.
Determine your recommendation of buy, hold, or sell the stock of your chosen company.
Include your revised Week 4 – Assignment, Section 4: Valuation Conclusion.
Year
Market Cap Growth
Enterprise Value
PE Ratio
PS Ratio
PB Ratio
P/FCF Ratio
P/OCF Ratio
EV/Sales Ratio
EV/EBITDA Ratio
EV/EBIT Ratio
EV/FCF Ratio
Debt / Equity Ratio
Debt / EBITDA Ratio
Debt / FCF Ratio
Current Ratio
Asset Turnover
Apple Inc. Financial ratios
2021
2020
26.47%
94.19%
2,490,692 1,941,766
25.65
33.45
6.64
7
38.49
29.39
26.13
26.17
23.34
23.8
6.88
7.28
20.44
24.68
22.5
28.58
27.07
27.26
1.98
1.72
1.01
1.39
1.34
1.53
1.08
1.36
1.07
0.84
2019
-9.30%
996,377
17.9
3.8
10.93
16.79
14.25
4.02
12.79
15.1
17.77
1.19
1.32
1.83
1.54
0.76
Return on Equity (ROE)
144.10%
75.20%
53.80%
Return on Assets (ROA)
27.60%
17.60%
16.10%
Return on Capital (ROIC)
36.20%
23.40%
22.30%
Earnings Yield
FCF Yield
Dividend Yield
Payout Ratio
3.90%
3.83%
0.58%
15.00%
2.99%
3.82%
0.72%
24.00%
5.59%
5.96%
1.40%
25.10%
Buyback Yield / Dilution
3.78%
5.74%
7.02%
Total Shareholder Return
4.37%
6.46%
8.43%
Apple .Inc
12 Months Ended
Income statement
Sep. 25, 2021
Sep. 26, 2020
Net sales
Cost of sales
Gross margin
365817
212981
274515
169559
Operating expenses:
Research and development
Selling, general and administrative
Total operating expenses
Operating income
Other income/(expense), net
Income before provision for income taxes
21914
21973
43887
108949
258
109207
18752
19916
38668
66288
803
67091
Provision for income taxes
Net income
14527
94680
9680
57411
CONSOLIDATED BALANCE SHEETS – USD ($)
$ in Millions
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Vendor non-trade receivables
Other current assets
Total current assets
Non-current assets:
Marketable securities
Property, plant and equipment, net
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Accounts payable
Other current liabilities
Deferred revenue
Commercial paper
Term debt
Sep. 25, 2021
Sep. 26, 2020
34940
27699
26278
6580
25228
14111
134836
38016
52927
16120
4061
21325
11264
143713
127877
39440
48849
216166
351002
100887
36766
42522
180175
323888
54763
47493
7612
6000
9613
42296
42684
6643
4996
8773
Total current liabilities
125481
105392
Term debt
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital,
$0.00001 par value: 50,400,000 shares
authorized; 16,426,786 and 16,976,763
shares issued and outstanding, respectively
109106
53325
162431
287912
98667
54490
153157
258549
57365
50779
Retained earnings
Accumulated other comprehensive income/(loss)
Total shareholders’ equity
Total liabilities and shareholders’ equity
5562
163
63090
351,002 $
14966
-406
65339
323,888
Non-current liabilities:
$
hs Ended
Sep. 26, 2019
260174
161782
16217
18245
34462
63930
1807
65737
10481
55256
Sep. 26, 2019
48844
51713
22926
4106
22878
12352
162819
105341
37378
32978
175697
338516
46236
37720
5522
5980
10260
105718
91807
50503
142310
248028
45174
$
45898
-584
90488
338,516
Apple .Inc
12 Months Ended
Income statement
Sep. 25, 2021
Sep. 26, 2020
Net sales
Cost of sales
Gross margin
365817
212981
274515
169559
Operating expenses:
Research and development
Selling, general and administrative
Total operating expenses
Operating income
Other income/(expense), net
Income before provision for income taxes
21914
21973
43887
108949
258
109207
18752
19916
38668
66288
803
67091
Provision for income taxes
Net income
14527
94680
9680
57411
CONSOLIDATED BALANCE SHEETS – USD ($)
$ in Millions
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Vendor non-trade receivables
Other current assets
Total current assets
Non-current assets:
Marketable securities
Property, plant and equipment, net
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Accounts payable
Other current liabilities
Deferred revenue
Commercial paper
Term debt
Sep. 25, 2021
Sep. 26, 2020
34940
27699
26278
6580
25228
14111
134836
38016
52927
16120
4061
21325
11264
143713
127877
39440
48849
216166
351002
100887
36766
42522
180175
323888
54763
47493
7612
6000
9613
42296
42684
6643
4996
8773
Total current liabilities
125481
105392
Term debt
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital,
$0.00001 par value: 50,400,000 shares
authorized; 16,426,786 and 16,976,763
shares issued and outstanding, respectively
109106
53325
162431
287912
98667
54490
153157
258549
57365
50779
Retained earnings
Accumulated other comprehensive income/(loss)
Total shareholders’ equity
Total liabilities and shareholders’ equity
5562
163
63090
351.002 $
14966
-406
65339
323.888
Non-current liabilities:
$
hs Ended
Sep. 26, 2019
260174
161782
16217
18245
34462
63930
1807
65737
10481
55256
Sep. 26, 2019
48844
51713
22926
4106
22878
12352
162819
105341
37378
32978
175697
338516
46236
37720
5522
5980
10260
105718
91807
50503
142310
248028
45174
$
45898
-584
90488
338.516
Apple .Inc
12 Months Ended
Income statement
Net sales
Cost of sales
Gross margin
Sep. 25, 2021
Sep. 26, 2020
100%
100%
58%
62%
42%
38%
Operating expenses:
Research and development
Selling, general and administrative
Total operating expenses
Operating income
Other income/(expense), net
Income before provision for income taxes
6%
6%
12%
30%
0%
30%
7%
7%
14%
24%
0%
24%
Provision for income taxes
Net income
4%
26%
4%
21%
CONSOLIDATED BALANCE SHEETS – USD ($)
$ in Millions
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Vendor non-trade receivables
Other current assets
Total current assets
Non-current assets:
Marketable securities
Property, plant and equipment, net
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Accounts payable
Other current liabilities
Deferred revenue
Commercial paper
Term debt
Sep. 25, 2021
Sep. 26, 2020
9,95%
7,89%
7,49%
1,87%
7,19%
4,02%
38,41%
11,74%
16,34%
4,98%
1,25%
6,58%
3,48%
44,37%
36,43%
11,24%
13,92%
61,59%
100,00%
31,15%
11,35%
13,13%
55,63%
100,00%
19,02%
16,50%
2,64%
2,08%
3,34%
16,36%
16,51%
2,57%
1,93%
3,39%
Total current liabilities
43,58%
40,76%
37,90%
18,52%
56,42%
100,00%
38,16%
21,08%
59,24%
100,00%
Non-current liabilities:
Term debt
Other non-current liabilities
Total non-current liabilities
Total liabilities
hs Ended
Sep. 28, 2019
100%
62%
38%
6%
7%
13%
25%
1%
25%
4%
21%
Sep. 26, 2019
14,43%
15,28%
6,77%
1,21%
6,76%
365,00%
48,10%
31,12%
11,04%
9,74%
51,90%
100,00%
18,64%
15,21%
2,23%
2,41%
4,14%
42,62%
37,01%
20,36%
57,38%
100,00%
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