A. Recommendation (75 points)

The recommendation should be a 3-page document that includes the 3 items described below.The written parts of this document should be double-spaced with 1-inch margins and 12-point font.

1. A one-page write up with a buy / sell / hold recommendation based on the current price vs. the estimated prices and ranges computed via DCF and market comps analysis.I am most interested in the rationale for your recommendation.

2. A one-page write-up in which you discuss the assumptions you used, especially any you think may not be appropriate or relevant for your firm.To make this project manageable and consistent across groups, there are a lot of requirements (aggregating items into a few classifications, looking at a limited history, assuming constant level of debt during forecast period, using the same interest rate for all of the analysis, straight-lining most recent year, etc.) and some may not be appropriate for your firm.

3. A “football field” graph that shows the ranges using DCF and several market comp measures, along with a line showing the “current” price of the stock used in the analysis.Note that this is a bit different than the football field created week 13.

In class, we covered creating a football field with market comps.For this table, you should include bars for the 25% – 75% range for your company’s stock price as of August 31, 2019, based on each of 5 multiples (EV/EBITDA, EV/EBIT. EV/revenue, P/E, and P/B).

In addition, for this final report, you should include a bar for DCF with terminal value as a perpetuity (upper bound from base growth + 0.5% and base WACC – 1.0%, and lower bound from base growth – 0.5% and base WACC + 1.0%).Also, since we covered terminal value from a multiple in class, you should add a second bar for DCF, this one with terminal value from a multiple (upper bound from base EV/EBITDA + 1 and base WACC – 1.0%, and lower bound from base EV/EBITDA – 1 and base WACC + 1.0%).

The 2 DCF bars should be on the left, followed by the 5 bars based on multiples.In other words, the bars should go in this order (left-to-right): DCF with terminal value as a perpetuity, DCF with terminal value from a multiple, EV/EBITDA, EV/EBIT. EV/revenue, P/E, and P/B.

Make sure to include a line that shows the actual price of the stock as of August 31, 2019.

This chart should provide a clear summary of your valuation analysis in an easy-to-read 1-page document.

B. Powerpoint (100 points)

Each group will make a 7-to-8-minute presentation that should cover the 4 areas listed below.Students should use overheads in their presentation.These overheads can include key points, tables, charts, pictures, other graphics, etc.

1. Description of the firm, its activities, etc.

2. An overview of its recent and forecast financial performance and position

3. Buy / sell / hold recommendation and rationale

4. Discussion of assumptions and whether they seem relevant and appropriate.I’m especially interested in those that do not seem appropriate and that may influence your price estimate and recommendation.

Students will be graded on clarity of presentation, which refers to how understandable both the oral and overhead parts are; relevance, accuracy, and professionalism of supporting material; coverage of required area; allocation of speaking time (all members should speak for roughly equal amounts of time), and ability to speak for the allotted 7-to-8 minutes.

C. Final report (100 points)

The final report is a single 14-page pdf document (with the cover page included as one of those 14 pages) that presents a complete report.You may need to print out the pieces and then scan them into a single document.Although this is not necessarily the optimal way to produce such a report, it is an easy way to create a single pdf from various sources.Contact me if you need access to a multi-page scanner.If you wait until the last minute to ask for help with scanning, I may not be able to help you and/or I may be able to help you, but with a deduction.Therefore, plan ahead.

This final report is intended to be a major product of this class.I want it to be the thing you can discuss at interviews.I want it to be a preparation for the type of analysis you may do in FNAN 477 with the Student Managed Investment Fund.

The items to include are:

1. Nice cover page with name of firm, names of group members, date, and any other relevant information.You can include the firm logo, the Mason logo, or any other graphics as well.

2. Brief executive summary – very briefly, describe the company and provide your recommendation (buy, sell, or hold).Also note any major issues associated with the assumptions you were required to make (1 page, double spaced).Assume that some readers would only read this one page, so make sure it includes the most relevant and important points you want to make about your firm, price estimates, recommendation, and analysis.

3. Company description from Form 10-K (1 page – from description deliverable).If your group’s submission was greater than 1 page, you’ll need to make revisions.

4. Historical and forecast balance sheet, income statement, and statement of cash flows, each on 1 page (so 3 total – 1 per statement).Creating these may require you to do some formatting to create easy-to-read and well-formatted tables.

5. Table with historic ratios (1 page – from ratios deliverable).

6. DCF analysis – table that includes the information presented in the “Valuation Analysis” section of the model, 2 5×5 sensitivity tables, and 1 tornado chart – (4 pages – from DCF deliverables)

7. Market comps analysis – football field chart with DCF included (1 page – from recommendation deliverable)

8. Recommendation (1 page – from recommendation deliverable)

9. Discussion of assumptions you used, especially any you think may not be appropriate or relevant for your firm (1 page – from recommendation deliverable)

Some groups may need to or simply want to revise some of these components.In some cases, you may not want to use the versions that were submitted earlier in the term (because you want to make revisions), and in other cases you do not want to submit those (because they had errors or didn’t adhere to directions).

Grades will be based on some combination of quality of writing and discussion (primarily in the executive summary), accuracy (so it’s important to revise any parts that were incorrect when initially submitted, although the effect of past errors on grades has already largely been incorporated), professionalism, and adhering to directions.