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Internet Search Company Comparisons

Internet Search Company Comparisons. By: Mike Walsh Katie Mannix Grant Paulsen Peter Borstelmann.

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Internet Search Company Comparisons

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  1. Internet Search Company Comparisons By: Mike Walsh Katie Mannix Grant Paulsen Peter Borstelmann

  2. The industry we chose to follow for our internet search project and final project was the sporting goods industry. We decided to focus upon the footwear and apparel aspect of the industry, choosing Nike, Converse, Reebok and Fila. Industry Description

  3. Stock Charts Nike Inc. Reebok International Ltd. Fila Holding S.p.A. Converse Inc.

  4. Descriptions of Financial Ratios Return on Equity: Evaluates only at the return earned by management on the stockholders investment. 12% ok…look for 30% Return on Assets: Evaluate whether management has earned a reasonable return with the assets under its control. Higher than 15% is a good average. Return on Investment:Evaluates the efficiency with which financial resources are employed. Current Ratio: Measures the short-term debt-paying ability of the company. The higher the current ratio, the more solvent the company is. Satisfactory Current Ratio is 2 to 1. Quick Ratio: Compares only the most liquid current assets to measure short-term solvency. Satisfactory Quick Ratio is 1 to 1.

  5. Description of Financial Ratios LT Debt/Equity:Measure of the companies long-term credit risk. The lower the debt ratio, the safer their position. This ratio is the Total Long Term Debt for the most recent fiscal quarter divided by Total Shareholder Equity for the same period. Total Debt Equity: This ratio is Total Debt for the most recent fiscal quarter by Total Shareholder Equity for the same period. Gross Margin: Measure of the profitability of the company’s products. This value measures the percent of revenue left after paying all direct production expenses. It is calculated as the trailing 12 months Total Revenue minus the trailing 12 months Cost of Goods Sold divided by the trailing 12 months Total Revenue and multiplied by 100. Operating Margin: This value measures the percent of revenues remaining after paying all operating expenses. It is calculated as the trailing 12 months Operating Income divided by the trailing 12 months Total Revenue, multiplied by 100.

  6. Description of Financial Ratios Price/Earnings: This ratio is calculated by dividing the current Price by the sum of the Diluted Earnings Per Share from continuing operations BEFORE Extraordinary Items and Accounting Changes over the last four quarters. Price/Sales: This is the current Price divided by the Sales Per Share for the trailing twelve months. If there is a preliminary earnings announcement for a quarter that has recently ended, the revenue (sales) values from this announcement will be used in calculating the trailing twelve-month revenue per share. Price/Book: This is the Current Price divided by the latest quarterly Book Value Per Share. Price/ Cash Flow: This is the current Price divided by the trailing twelve month Free Cash Flow Per Share. Free Cash Flow is calculated from the Statement of Cash Flows as Cash From Operations minus Capital Expenditures and Dividends Paid

  7. Nike Inc. Financial Analysis Stock Symbol: NKE

  8. NIKE INC. • For the three months ended 8/31/00, Revenues for Nike Inc. rose 5% to $2.64 Billion dollars. • Net Income Increased 5% to $210.2 Million Dollars. • Reasons for the rise in Revenue and Net Income have been reported increased in International regional footwear, apparel and equipment sales. • Other factors for the increase were a decrease in income taxes and improved margins. • The Market Cap for Nike in Millions was: • 10,938.93 (MIL)$ • As of 5/31/2000 Nike had 21,800 Employees.

  9. Key Ratios and Statistics for Nike Inc. • Management Effectiveness • Return on Equity: 18.17 • Return on Assets: 10.13 • Return on Investment: 15.49 • Price and Volume(Stocks) Recent Price: $44 52 Week High: $56 52 Week Low: $26 Avg. Daily Vol (Mil) 1.13 • Valuation Ratios • Price/Earnings: 20.46 • Price/Sales: 1.32 • Price/Book: 3.57 • Price/Cash Flow: 15.03

  10. Key Financial Ratios Cont. • Financial Strength Quick Ratio: .91 Current Ratio: 1.70 LT Debt/Equity: .14 Total Debt/Equity .45 • Profitability • Gross Margin%: 40.44 • Operating Margin%: 10.16 • Profit Margin%: 6.45

  11. Is Nike a Good Investment? Yes, Nike seems like it is on the right path in the footwear Industry. Nike Inc. has been increasing in every category possible, that is why they are ranked # 1 in the Athletic footwear industry. They are capable of paying off their short term debt, and are also quite reliable in the long term as well. Stocks for Reebok are up as well, after falling to a 52 week low of $26, they are now at $44and rising. Overall Nike seems like a solid company and will compete if not control the top Athletic Footwear Companies for some time.

  12. Reebok International Ltd. Financial Analysis Stock Symbol: RBK

  13. Reebok-Past Nine Months • For the 9 months ended 9/30/00, net sales decreased 2% to  $2.24B. • Net income totaled $74.7M, up from $25.7M.  • Revenues reflect decreased U.S. apparel sales. • Net income  reflects the absence of a $38M special charge related to  restructuring activities, decreased S/G/A expenses as a  percentage of sales and decreased interest expense. 

  14. Price & Volume Recent Price $21 52 Week High $22 52 Week Low $7 Avg Daily Vol (Mil) 0.50 Mgmt Effectiveness Return on Equity: 11.53 Return on Assets: 4.24 Return on Investment: 7.05 Key Ratios and Statistics • Valuation Ratios • Price/Earnings: 20.87 • Price/Sales: .44 • Price/Book: 2.14 • Price/Cash Flow: 10.74

  15. Key Ratios Cont. • Profitability • Gross Margin %: 38.22 • Operating Margin %: 3.67 • Profit Margin %: 2.34 • Financial Strength Quick Ratio: 1.20 Current Ratio: 2.08 LT Debt/Equity: 0.61 Total Debt/Equity: 0.80

  16. Is Reebok a Good Investment? Yes, Reebok seems like it is on the right path in the footwear Industry. They are capable of paying off their short term debt, and are also quite reliable in the long term as well. Stocks for Reebok are up as well, after falling to a 52 week low of $7, they are now at $21 and rising. Overall Reebok seems like a solid company and will compete with the top Athletic Footwear Companies for some time.

  17. Fila Holdings, S.P.A Financial Analysis Stock Symbol: FLH

  18. FILA Holdings, S.P.A (FLH) • FLH is a designer and marketer of athletic and casual footwear, and of activewear, casualwear and sportswear, for men, women and children. • For the 9 months ended 9/30/00, revenues increased 9%. • Net loss before U.S. GAAP decreased 43%. • Revenues reflect increased apparel and footwear sales. Lower loss reflects decreased selling, general and administrative expenses as a percentage of revenues.

  19. Financial Ratios • Valuation Ratios • Price/Earnings: N/M • Price Sales: 0.27 • Price/Book: 2.08 • Price/Cash Flow: N/M • Price and Volume Recent Price: $9 52 Week High: $12 52 Week Low: $7 Average Daily Volume (mil): 0.02 • Management Effectiveness • Return on Equity: -30.84 • Return on Assets: -6.31 • Return on Investments: -18.02

  20. Financial Ratios Cont. • Financial Strength • Quick Ratio: .51 • Current Ratio: 1.13 • LT Debt/Equity: .54 • Total Debt/Equity: 3.27 • Profitability • Gross Margin%: 39.63 • Operating Margin%: -0.19 • Profit Margin%: -4.46

  21. Is Fila a Good Investment? No, better companies with less debt, less risk, and a more promising futures can be found in this industry or others.

  22. Converse Inc. Financial Analysis Stock Symbol: CVEO

  23. Examples of Poor Performance • Net sales for the third quarter of 1999 decreased by 22.1% to $61.0 million from $78.3 million • WHY? • The decrease in net sales in the third quarter of 1999 was primarily attributable to decreases in the athletic originals, children’s and cross training categories. • Selling, general and administrative expenses increased $0.7 million to $20.6 million in the third quarter of 1999 compared to $19.9 million in the prior year period. • Converse’s global order backlog declined to $89.8 million from $109.3 million.

  24. Ratio Analysis • Valuation Ratios • Price/Earnings: N/M • Price/Sales: .05 • Price/Book: N/M • Price/Cash Flow: N/M • Price & Volume Recent Price: $.56 52 Week High: $2.00 52 Week Low: $.26 Avg Daily Vol (Mil): .09 • Management Effectiveness • Return on Equity: N/M • Return on Assets: -26.92 • Return on Investment: N/M

  25. Ratios Continued • Financial Strength • Quick Ratio: .19 • Current Ratio: .49 • LT Debt/Equity: N/M • Total Debt/Equity: N/M • Profitability • Gross Margin: 21.41 • Operating Margin: 3.80 • Profit Margin: -20.74

  26. Is Converse a Good Investment? No, better companies with less debt, less risk, and a more promising futures can be found in this industry or others.

  27. Industry Comparison

  28. What one can tell from the Ratio Chart: • Of the four companies, Reebok has the best short term debt-paying ability/solvency rate. Nike is second, with Fila and Converse a distant 3rd and 4th. • Nike has the best long term debit ability. • Nike is a solid investment, stocks are at a high $43.69 per share, double that of Reebok at $20.38 with Fila and Converse failing to reach $10 per share. • Nike has the best Gross Margin, at 40.44 % with Reebok having a slight less total at 38.22%. • Overall Market Capital in the Millions, Nike completely blows away the competitors with 11,496.14, Reebok with 1,305.19, Fila 231.84, and Converse with 9.81.

  29. Additional Information • The information gathered for this presentation can be found at the following Internet sites: • NIKE INC: www.nikebiz.com • http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=6446N • REEBOK INC: www.reebok.com • http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=7530N • CONVERSE INC: www.converse.com • http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=A0A38 • FILA Holdings S.p.A.: www.fila.com • http://www.marketguide.com/mgi/SNAP.asp?nss=www&rt=snap&rn=A0560

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