final project report and excel valuation

General Guidelines

As noted in the course objective, the main learning objective is to provide each of you with the experience of doing fundamental research and valuation analysis on a company and then selling your recommendation to a discerning and perhaps somewhat skeptical audience of your peers. Each student analyst will search through the stock universe within their respective sector to identify a stock (or stocks) that is potentially undervalued by the market for inclusion in the portfolio. The student will conduct his/her due diligence and analysis of the company, write a research report and present it as a “buy” recommendation to the class. Also, understand undervaluation alone is not a catalyst for a positive return; a company’s shares can remain undervalued for an excruciatingly long time (aka “Value Trap”). So you must dig deeper and try to surface what the true “catalyst” is, what’s the story, and why you expect the stock to outperform its sector ETF in the next 6 – 12 months. Following the presentations by students of their stock recommendations, each student will be asked to vote as to whether the recommended stock should be purchased and whether all 1 of the available funds allocated for the sector should be invested. Each student, including the presenter, will have one vote. It should be understood by each of you that the intent of a “yea” vote is that you believe that the presented idea will positively impact the fund as a whole. This means that the corresponding stock from the time of purchase will outperform the sector ETF and contribute to the overall fund outperforming the benchmark.

Final Project Report

The written investment report is your most important activity in this course. The report will analyze a particular company/set of companies in detail and provide an investment recommendation. Your analysis will consist of an Investment Thesis, Company Description, Industry Analysis, Financial Analysis, and Valuation Analysis. In addition, some focus should be placed, in the report and certainly in the presentation, on identifying 2-3 key drivers or “catalysts” that you believe will likely boost the stock price. The report will be individually prepared and submitted by email, along with the valuation analysis in Excel, to the entire group and to the instructors prior to the presentation date. In the written investment report, the analyst should take time to address how the proposed stock fits with the rest of the portfolio and the other stocks currently held in the same sector (see sample analyst report for ideas on how to generate the write-up). The analyst will also prepare a PowerPoint presentation in support of the investment thesis and buy recommendation. Since a big part of your future management careers is to sell your ideas successfully to clients, colleagues, employers, and employees, it is important that as part of your in-class presentation, you present arguments that are well constructed and convincing.

Things to consider in the report and analysis:

1. Outline the characteristics of a business and their business model, e.g, evaluate cyclicality, understand and evaluate the overall business quality using qualitative metrics, e.g., Return on Invested Capital (ROIC), Return on Assets (ROA), Return on Equity (ROE), profit margin.

2. Analyze the Balance Sheet: Evaluate the appropriateness of the company’s balance sheet structure, especially considering their business model using quantitative metrics, e.g., Debt/Equity, Times Interest Earned, Equity Multiplier.

3. Apply valuation techniques and metrics to determine the intrinsic value of a business, e.g., Price to Earning (P/E), Price to Book (P/B), Price to Tangible Book (P/TB), 2 Price to Cash Flow (P/CF), Enterprise Value to Earning Before Interest Taxes Depreciation and Amortization on (EV/EBITDA), Discounted Cash Flows (DCF), industry and competitor comparative analysis.

4. Apply macro-valuation techniques to come to a recommendation on sector net exposure.


We have Technology and Telecommunication Sectors. We have decided to sell our shares in PayPal and buy shares in Palo Alto Networks. All the valuation should be done using multiples Price/Sales as the multiple for the next 5 years (the valuation analysis should be done in Excel). I have attached a final report that was done last semester.