Bluegreen and 3M

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Stock analysis of Bluegreen and 3M

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Bluegreen and 3M

  1. 1. . . . . . . . . . . April 30th, 2007 Bluegreen and 3M Accounting 252 . . . . . . . . . .
  2. 2. . . . . . . . . . . Bluegreen Corporation(NYSE:BXG) Some Basic Information (Dollars in thousands except per share data) Bluegreen Corporation begun in 1966 and happily sells timeshares or in other words, “leisure products and lifestyle choices.” (ARO5, 1) The most successful year for Bluegreen was 2005 according to the annual report. In one year Bluegreen Corporation moved up ten spots on “Forbes’ list of The 200 Best Small Companies” (AR05, 2) to #57. In addition, Bluegreen was No. 48 on “Fortune’s list of America’s 100 Fastest Growing Companies.” (AR05, 2) According to the 2005 annual report for Bluegreen, the revenues have increased . . . . . . . . . . since December 31, 2002 to $684,156, which between those times is about a 55% increase. The net income has been increasing every year as well, a total of 59% from ’02-’05. “Cost of sales in the Bluegreen Communities segment decreased to 52.2% from 55.1% last year, due to the mix of homesites sold in each period and our constant attention to homesites pricing in each of our markets.” (AR05, 3) SG&A increased to 43.9% from 41.6% in 2004. Part of the rise in SG&A was due to start up costs. Some nice figures of Bluegreen as of December 31, 2005: $66.4 million in unrestricted cash, “a record book value per share of $10.31”, and 0.67:1 debt-to-equity ratio. Their cost of sales actually decreased for the Communities section of their company. The decrease was from $105.8 to $100.3 million, a 5% decrease. • At last count, Bluegreen had 153,000 owners. • “The company has approximately 5,000 employees working in two divisions: Bluegreen Resorts and Bluegreen communities.” • 230,000 vacation experiences were delivered in 2005.
  3. 3. . . . . April 30th, 2007 . . . . . . Graphs Above is a year of monthly increments of BXG. Between July and August, you can see where it found the previous support between May and June. Once again, around mid-February compared to mid-August. This one is a daily view over a period of six months. The monthly graph was easier to find the supports, that is why I listed it first. This final graph is almost five years worth of data. 2
  4. 4. “Former Wyndham Vacation Ownership Executive to Lead Bluegreen's Growing Vacation Ownership Business.” According to Bluegreen Corporation, a new president of Bluegreen Resorts was announced on April 30, 2007 to be David L. Pontius. A “27-year veteran” and having worked for five years with Wyndham Vacation Ownership® Inc., Mr. Pontius brings quite a bit of experience. “In 2006 Wyndham Vacation Ownership had approximately $1.7 billion in vacation ownership interest sales and approximately 150 vacation ownership properties throughout the United States, Mexico, the Caribbean and the South Pacific.” Chief executive officer and president of Bluegreen, John Maloney, Jr., stated, “It is my great pleasure to welcome Dave to Bluegreen Resorts. The fact that he has chosen to come to us from one of the industry's leading vacation ownership companies is, we believe, a validation of Bluegreen's business model and outlook. Dave has extensive experience in sales and marketing, product development, finance, managing organizations and creating results-driven teams. His abilities, drive and dedication mirror those of our management team whose efforts to date have grown Bluegreen Resorts into an organization with over 170,000 owners, 43 in-network resorts, and 2006 sales of nearly $400 million. We believe that Dave will become an important asset in our continuing efforts to expand our industry presence and deliver vacation experiences that rank among the best in the industry.quot; Mr. Pontius replied, quot;Bluegreen Resorts has experienced impressive growth and established itself as one of the industry's premier vacation ownership companies. It has also earned its reputation for quality vacation destinations, benchmark customer service, innovative marketing and fiscal responsibility. I look forward joining Bluegreen's strong management team as we work to further strengthen and expand the business platform, elevate the brand and leverage the social, economic and demographic trends that are driving the 3
  5. 5. . . . . th April 30 , 2007 . . . . . . growth of our industry. I'm very excited about this opportunity to work with Bluegreen's talented and dedicated team of managers and associates.quot; 4
  6. 6. P/E RATIO Today Bluegreen Corporation closed at 11.48, which is up .43. As of today, Bluegreen’s P/E Ratio is 11.97. Bluegreen has been on the market for as far back as 1987 on the NYSE. According to Forbes, BXG’s five-year average ratio is 10.2. For the current year, the earnings estimates are said to be 1.27 and 1.47 for 2008. (Today’s trading) If I took the average P/E ratio, 10.2 and multiplied it by 1.27, I would get $12.94, which is the price I would be looking to buy the stock. If I took 10.2 * 1.47= $14.99; this price would not want to buy but rather sell the stock. Based on this research, I would probably buy the stock. For one, there revenues are increasing every year. The graph of the year information looks like it hit the second to last support level, so it might start to go back up again. Seeing that the suggested purchase price is higher than what BXG is selling for right now, it is most likely a good time to buy. 5
  7. 7. . . . . April 30th, 2007 . . . . . . 3M (MMM) NYSE (Millions) This company provides so many well know products in this world. It is no wonder they are doing so well financially. “The major mission of 3M over the coming few years is not only to position ourselves for higher growth, but also to structure ourselves to sustain that growth for many years to come.” (AR, 3) In Computer and Software Business alone for 2006, 3M brought in $3,238 and the Display and Graphics Business came home with $3,768 in net sales (AR, 17-18). For the year of 2006, 3m had a total of $22,923 in net sales and operating income of $5,696. The cost of sales has gone up to 51.1% while the SG&A expenses have remained steady for the past three years. The operating income has steadily increased over the years to 24.8%. In addition, for 2006 total assets equaled $21,294 while long-term debt amounted to $1,047. Total current cash is equal to $1,447 and total current liabilities is $7,323, if they had to pay the liabilities off right now, it would take some time. Net income was $899 compared to $771 in 2005. For some variety, 3M actually has breast implant liabilities and receivables in the amount of $4 and $93, respectively. Additionally, they have respirator mask/asbestos liabilities and receivables of $181 and $380, respectively. 6
  8. 8. To the right is a graph of a one-year snapshot of 3M. The amount of their last trade was a whopping $83.61 per share. Below is a six- month view. It hit previous supports many times. The following is a 1-month snapshot. 7
  9. 9. . . . . April 30th, 2007 . . . . . . “3M, Gen-Probe Form Collaboration to Develop Rapid Molecular Tests to Combat Healthcare-Associated Infections” A global connection has been formed by 3M and Gen-Probe to expand and produce “rapid, easy-to-use nucleic acid tests to detect certain dangerous healthcare-associated infections (HCAIs) such as methicillin-resistant Staphylococcus aureus (MRSA).” This collaboration is a positive move for 3M to help advance their business. Division vice president of 3M medical division, Chuck Kummeth said, “We are delighted to work with one of the world’s leading infection control companies to employ our proprietary molecular technologies in the fight against healthcare- associated infections.” The majority of the project will be funded by 3M. Food safety is another area that the two companies will work together. They will try to enhance food safety by developing “rapid molecular tests” that will advance the food manufacturers efficiency in testing food. “3M and Gen-Probe are recognized innovators in their respective fields. For example, both companies have received the National Medal of Technology, the nation's highest honor for technological innovation.” One can conclude that together 3M and Gen- Probe can produce some wonderful results for the world. 8
  10. 10. The graph below is the fluctuations of 3M stock for May 1st, 2007. The ending price for a share of 3M stock was $83.61, which was no change from the day before. Considering that one closing price back in 1970 was $4.7188 per share, 3M has come a long way. The current P/E ratio is 14.60 and the earnings per share is 5.75. According to Forbes, the fiver year average P/E ratio is 21.8. The average Earnings Estimate for 2007 is 4.83, the low EE is 4.65 and the high is 5.10. For 2008, the average EE is 5.39, the low is 5.15 and the high is 5.65. I will use the averages to figure out stock prices. When I take 21.8 * 4.83, I get $105.29 for the current price I would be looking for to buy. Next, I take 21.8 * 5.39 and come up with $117.50. If the price was this high already I would either sell if I owned stock or decide not to buy currently because it is probably as high as it is going to get. Below is a chart of the earnings estimates for the quarter and year levels. If I had the opportunity to buy right now, I would not. Although the average buy price of $105.29 is possible, just by looking at the six-month graph, it looks like the stock has been on a bull-run and might be ending soon. With the price of stock already at $83.61 per share, it is not worth the risk to buy this stock right now; I would feel more comfortable buying the Bluegreen stock at this moment. 9
  11. 11. . . . . April 30th, 2007 . . . . . . Bibliography quot;2006 Annual Report.quot; 3M. 2007. 3M. 2 May 2007 <http://media.corporate- ir.net/media_files/nys/mmm/reports/2006ar.pdf>. quot;3M Company: Earnings Estimates.quot; MSN Money. MSN. 2 May 2007 <http://moneycentral.msn.com/investor/invsub/analyst/earnest.asp?Symbol=mm m>. quot;3M Co MMM (NYSE).quot; Estimates. 02 May 2007. Reuters. 2 May 2007 <http://stocks.us.reuters.com/stocks/estimates.asp?symbol=MMM&WTmodLOC =L2-LeftNav-23-Estimates>. quot;3M Co. Ratios and Returns.quot; Forbes.com. 01 May 2007. Forbes. 2 May 2007 <http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=MMM>. quot;3M Co..quot; Yahoo Finance. 01 May 2007. Yahoo. 2 May 2007 <http://finance.yahoo.com/charts#chart1:symbol=mmm;range=3m;indicator=vol ume;charttype=line;crosshair=on;logscale=on;source=undefined>. quot;Bluegreen Corp | Ratios and Returns.quot; Forbes.com. 2007. Forbes. 2 May 2007 <http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=BXG>. quot;Financial Reports.quot; Bluegreen. Bluegreen Corporation. 2 May 2007 <http://phx.corporate-ir.net/phoenix.zhtml?c=112002&p=irol-reports>. 10

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