Company profile: a single paragraph giving an overview of the company summarising its performance over the last twelve months, its products and the markets in which it operates. The remainder of the first page would summarise data on price performance and valuations. It would end with your recommendation on whether to buy, sell or hold the shares in the company.
Performance and news analysis: Compare the company’s returns with that of the market as well as calculating the company’s risk adjusted returns. Identify news (which include earnings announcements, release of relevant economic data, analysts’ recommendations) which are relevant to the firm’s price performance as well as supporting your analysis in the report.
Valuation: Perform a dividend discount model (DDM )valuation under the capital asset pricing model (CAPM) framework using the multistage growth model. Use Price multiples such as PE (Price to earnings) PB (Price to Book) and PS (Price to Sales) and DY (Dividend Yield) metrics to complement the DDM valuation. The valuation results are to be presented using the security market line (SML). Finally, a discussion on the DDM versus price multiples to inform the client is required.
