TS
Uploaded byTanner Segro
PPTX, PDF108 views

Capital Presentation_Final

The document summarizes an investment analysis of Owens Corning (OC), a building materials company. Key points include: - OC has 3 business segments: roofing, insulation, and composites, with composites making up 30% of total earnings on average. - The building materials industry is consolidated with the top 3 companies controlling 90% of the US market. OC is the largest US manufacturer. - Near term factors are positive for OC including tight composite capacity, operating above 90% utilization, forecasted US GDP and housing starts growth, and low oil prices. - Valuation ranges from $33-65 per share based on DCF and comparable company analyses, with $61+ the price

Embed presentation

Download to read offline
CFA Challenge Capital University Matt Claborn Nolan Gladieux Logan Stout Tanner Segro
Business Description • Founded in 1938 • Declared bankruptcy in 2007 due to high volume of asbestos lawsuits • Management has stayed the same since bankruptcy • FY 2015 earnings exceeded expectations 34% 34% 32% Percent of Revenue - 2015 Roofing Insulation Composites Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Owens Corning (OC) Roofing 99% U.S./Canada Insulation 84% U.S./Canada Ind. Comp. 39% U.S./Canada
Industry Overview • 3 major competitors – Combine for 90% of U.S. market • Asphalt 1 of 3 raw materials Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Owens Corning (OC) Roofing 99% U.S./Canada Insulation 84% U.S./Canada Ind. Comp. 39% U.S./Canada • Largest U.S. manufacturer • 80% of sales from new construction • Mostly private and Chinese competition • Capacity driven pricing due to fixed cost investment • Recent acquisition - $80M price 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Total Earnings COMPOSITES TOTAL BUILDING MATERIALS 30% Average Composites % of Earnings
Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion 4.1% 1.0% 1.8% 2.8% 3.8% 3.3% 2.7% 1.8% -0.3% -2.8% 2.5% 1.6% 2.2% 1.5% 2.4%2.3%2.5%2.3% 2.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% U.S. GDP Growth
Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion 1 10 100 1000 10000 TotalU.S.HousingStarts(millions) U.S. Housing Starts Housing Starts - US
0 500 1000 1500 2000 2500 3000 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SquaeFeet U.S. Median New Home SquareFootage Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 • Continued Increase in Home Size • ~25% increase since 2000 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
$0 $20 $40 $60 $80 $100 $120 $140 $160 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 West Texas Crude Oil Price per Barrel Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 • Continued Increase in Home Size • ~25% increase since 2000 • Low oil price • Lowest price in 12 years Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
Valuation Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • $61-$65 using DCF • Rev. increase 6.6%, 4.7%, and 2.7% 2016-18 • Op. costs increase 2.5%, 2.4%, and 2.1% 2016-18 Bull • $40-$45 • Sales and operating costs match prior 5 year avg.Base • $33-$35 • Assumes no growth in US Housing Starts, and US GDP at half of current estimatesBear
Valuation Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • Validated with Monte Carlo Simulation • Calculated beta: 1.25 • 9 years with S&P 500 • DDM not appropriate • Limited dividend history Monte-Carlo Simulation
Financial Analysis Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • Increasing EBIT and net margins • DuPont Analysis • Total Asset Turnover • Net Profit Margins • Consistent inventory management 0 20 40 60 80 100 120 2010-12 2011-12 2012-12 2013-12 2014-12 2015A Days Inventory On Hand OC MHK PPG
Financial Analysis Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • Maintaining a BBB- Credit Rating • No more levered than the industry 31% 69% Capital Structure 2010 Debt Equity 0% 10% 20% 30% 40% 50% 60% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Industry Debt Structure PPG OC MHK 35% 65% Capital Structure 2015 Debt Equity
Economic Slowdown Competitive Pricing Bankruptcy Credit Downgrade Commodity Pricing Interest Rate Environment Investment Risks Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
Summary and Conclusion An investment operation is one which upon thorough analysis promises safety of principal and adequate return (Graham, 1973) 1. Thoroughly analyze the company the soundness of its business • No additional risks compared to competitors • Bankruptcy a one time event 2. Deliberately protect against serious losses • Base is likely worst case 3. Aspire to adequate, not extraordinary performance • Bull is meeting current macro expectations Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Current Price: $40.52 (2/12/2016) Price Target: $61+ (51% Increase) Recommendation: Buy
Appendix
Is the firm generating sufficient profits? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Gross Margin Sales – Cost of Goods Sold $945 $956 $1,028 $797 $966 $976 EBIT Net Income + Interest + Taxes $304 $206 $461 $74 $385 $392 EBITDA Net Income + Interest + Taxes + Dep./Amor/ $628 $526 $779 $423 $717 $696 Earnings Per Share (EPS) Net Income / Average Shares Outstanding $2.76 $7.94 $2.35 -$0.16 $1.74 $1.92 Gross Margin % (Sales – Cost of Goods Sold) / Sales 18.1% 19.1% 19.3% 15.4% 18.2% 18.5% Profit Margin % Net Income / Sales 6.2% 18.7% 5.2% -0.4% 3.9% 4.3% Return On Assets (ROA) Net Income / Average Total Assets 4.3% 13.0% 3.7% -0.3% 2.7% 3.0% Return On Invested Capital (ROIC) Net Income / Average(Long Term Liab. + Tot. Eq.) 5.0% 15.0% 4.2% -0.3% 3.1% 3.4% Return On Equity (ROE) Net Income / Average Shareholder Equity 8.8% 25.6% 7.5% -0.5% 5.4% 6.1%
How efficiently is the firm utilizing its assets? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Working Capital Current Assets – Current Liabilities $713 $453 $728 $706 $856 $824 Working Capital Turnover Sales / Average (Current Assets – Current Liabilities) 7.3 11.03 7.33 7.33 6.19 6.40 Asset Turnover Sales / Average Total Assets 0.70 0.70 0.71 0.68 0.69 0.70 A/R Turnover Sales / Average Accounts Receivable 8.4 9.2 8.7 8.6 7.8 7.8 Days Sales Outstanding (DSO) 365 /Accounts Receivable Turnover 44 40 42 42 47 47 Inventory Turnover Cost of Goods Sold / Average Inventory 5.6 6.5 5.4 5.6 5.3 5.3 Days Inventory On-Hand 365 / Inventory Turnover 65 56 67 66 68 69
How effectively is the firm using its financial capital? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Current Ratio Current Assets / Current Liabilities 1.75 1.47 1.80 1.78 1.86 1.84 Acid Test Ratio (Cash + Accounts Receivable) / Current Liabilities 0.72 0.63 0.73 0.72 0.75 0.75 Debt Ratio Total Liabilities / Total Assets 0.51 0.49 0.51 0.53 0.50 0.51 Debt-to-Equity Total Liabilities / Total Equity 1.04 0.96 1.03 1.14 1.02 1.05 Assets-to-Equity Total Assets / Total Equity 2.04 1.96 2.03 2.14 2.02 2.05 Times Interest Earned EBIT / Interest Expense 2.72 1.87 4.27 0.65 3.44 3.44 Free Cash Flow CF from Op. Act. + CF from Inv. Act. $85.20 $239 -$156 $77 $111 $155 Free Cash Flow % Free Cash Flow / Revenue 1.63% 4.78% -2.92% 1.49% 2.10% 2.94%
Is the firm creating appropriate shareholder value? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 PE Ratio Market Price Per Share / Earnings Per Share 17.00 3.92 12.23 0.00 23.44 18.57 Market Capitalization Market Price / Share x Num. Shares Outstanding $5,507 $0 $0 $0 $0 $0 Market Value Added (MVA) Total Market Value – Total Equity $1,833 -$3,648 -$3,701 -$3,538 -$3,793 -$3,692 Dividend Yield Ratio Dividends per Share / Market Price per Share 1.45% 0.00% 0.00% 0.00% 0.00% 0.00% Dividend Payout Dividends / Net Income 25% 0% 0% 0% 0% 0% Price to Sales Market Price Per Share / Revenue Per Share 1.06 0.73 0.63 0.87 0.90 0.80
WACC Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Table 3: WACC Analysis Risk Free Rate 2.26% Calculated Beta 1.25 Market Risk Premium 6.63% CAPM 10.55% Weight of Equity 73% Weighted Cost Equity 7.74% Avg. Bond Market Value 5.35% Tax Rate 20.79% Weight of Debt 27% Weighted Cost of Debt 1.13% Weighted Cost Equity 7.74% Weighted Cost Debt 1.13% WACC 8.87%
Valuation – Bull Case Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Terminal Revenue $5,343 $5,696 $5,963 $6,124 $6,210 $6,297 Operating Costs (Revenue - EBIT) $4,843 $4,964 $5,083 $5,190 $5,216 $5,242 Taxes $135 $88 $211 $224 $288 $306 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 29.0% 29.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $551 $576 $617 $613 $656 $10,303 Time Horizon 3-yr 5-yr Enterprise Value $7,484,060,833 $7,178,681,117 Shares Outstanding 116,470,000 116,470,000 Price Target $64.26 $61.64
Valuation – Base Case Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Terminal Revenue $5,343 $5,418 $5,494 $5,571 $5,649 $5,728 Operating Costs (Revenue - EBIT) $4,843 $4,867 $4,892 $4,916 $4,941 $4,965 Taxes $135 $66 $145 $157 $205 $221 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 29.0% 29.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $392 $365 $405 $410 $449 $7,895 Time Horizon 3-yr 5-yr Enterprise Value $5,163,840,482 $4,725,373,589 Shares Outstanding 116,470,000 116,470,000 Price Target $44.34 $40.57
Valuation – Bear Case Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Revenue $5,343 $5,438 $5,539 $5,635 $5,725 $5,811 Operating Costs (Revenue - EBIT) $4,843 $4,903 $4,968 $5,028 $5,088 $5,149 Taxes $135 $64 $137 $146 $153 $159 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 24.0% 24.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $378 $341 $369 $391 $410 Time Horizon 3-yr 5-yr Enterprise Value $4,060,676,518 $3,816,847,550 Shares Outstanding 116,470,000 116,470,000 Price Target $34.86 $32.77
Multiple Linear Regression – Total Bldg Materials Sales Initial Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix SUMMARY OUTPUT TOTAL BUILDING MATERIALS Regression Statistics Regre Multiple R 0.941954803 R Square 0.887278851 Adjusted R Square 0.84500842 Standard Error 349.9243637 Observations 23 ANOVA df SS MS F Significance F Regression 6 15421373.99 2570228.999 20.99053249 9.4977E-07 Residual 16 1959152.966 122447.0603 Total 22 17380526.96 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -3767.823534 4913.485029 -0.76683322 0.454347572 -14183.9465 6648.299416 -14183.9465 6648.299416 Housing Starts 0.112589543 0.032951011 3.416876801 0.003532102 0.042736522 0.182442565 0.042736522 0.182442565 U.S. GDP - AVERAGE 0.235494806 0.209436364 1.124421765 0.277420905 -0.20849045 0.679480063 -0.20849045 0.679480063 Producer Price Index (Asphalt) 12.72645558 9.474461789 1.343237839 0.197938691 -7.35850618 32.81141733 -7.35850618 32.81141733 China GDP - AVERAGE -0.00181447 0.001332834 -1.36136277 0.192264033 -0.00463995 0.001011011 -0.00463995 0.001011011 U.S. Unemployment Rate Average -31.22599436 104.7669102 -0.29805207 0.769499017 -253.321923 190.8699339 -253.321923 190.8699339 U.S. Median Weekly Earnings 3.487190146 20.37816303 0.171123871 0.866271793 -39.7125856 46.68696594 -39.7125856 46.68696594
Multiple Linear Regression – Total Bldg Materials Sales Final Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix SUMMARY OUTPUT TOTAL BUILDING MATERIALS Regression Statistics Multiple R 0.924022853 R Square 0.853818233 Adjusted R Square 0.83989616 Standard Error 347.9472165 Observations 24 ANOVA df SS MS F Significance F Regression 2 14849719.38 7424859.692 61.32838355 1.70364E-09 Residual 21 2542412.575 121067.2655 Total 23 17392131.96 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -2520.401851 539.1752296 -4.67455052 0.000129688 -3641.67812 -1399.12558 -3641.67812 -1399.12558 Housing Starts 1.257373201 0.169459854 7.419888394 2.69374E-07 0.904962144 1.609784259 0.904962144 1.609784259 U.S. GDP - AVERAGE 0.330756562 0.033631356 9.834767234 2.5917E-09 0.260816328 0.400696796 0.260816328 0.400696796
Multiple Linear Regression – Total COGS Final Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix
Linear Regression Example – Total Sales vs. U.S. GDP Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix y = 0.4109x - 450.21 R² = 0.7465 0 1000 2000 3000 4000 5000 6000 7000 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 OCTotalSales U.S. GDP (millions) Total Sales vs. U.S. GDP (1991-2014)
Linear Regression Example – Total Sales vs. U.S. GDP Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix
Linear Regression Example – Total COGS vs. West Texas Crude Oil Price Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix y = 19.336x + 2774.6 R² = 0.5267 0.0 1000.0 2000.0 3000.0 4000.0 5000.0 6000.0 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 Total COGS vs. WestTexas Crude Price Series1 Linear (Series1)

More Related Content

PPTX
Under Armour_Security Analysis
byTrang Nguyen
 
PPTX
ACG_Cup_-_Valuation
byIke Ekeh
 
PPTX
Team 1 presentation acg cup v1
byLin Zhangde
 
PPTX
ACG Cup - Valuation
byNathan McCutcheon
 
PPTX
ACG Cup
byFarouq Masoudy
 
PDF
ACG Mergers & Acqusitions 2015
byRobert Ford, MBA
 
PPTX
Cleveland Research Company Stock Pitch 2016 - Finalist
bySean Hynes
 
PPTX
Final Shiloh
byMesfin Symons
 
Under Armour_Security Analysis
byTrang Nguyen
 
ACG_Cup_-_Valuation
byIke Ekeh
 
Team 1 presentation acg cup v1
byLin Zhangde
 
ACG Cup - Valuation
byNathan McCutcheon
 
ACG Cup
byFarouq Masoudy
 
ACG Mergers & Acqusitions 2015
byRobert Ford, MBA
 
Cleveland Research Company Stock Pitch 2016 - Finalist
bySean Hynes
 
Final Shiloh
byMesfin Symons
 

What's hot

PPTX
Creighton team acg cup 2015 final round v final 2
byLin Zhangde
 
PPTX
ACG Cup Presentation - Round 1
byMilton Parra
 
PPT
operating assumption change
byCWA Shah Alam Tremendous Wealth Advisors
 
PPTX
P&g presentation
byElisa Reyes
 
PPTX
GMED
byMesfin Symons
 
PPT
P&G financial analysis, spring 2014
byEcaterina Barbus
 
PPTX
ACG Cup 2nd round case competition final presentation
byliujingyi
 
PPTX
Thermo Fisher Scientific Inc
byMesfin Symons
 
PDF
Q2 2018 financial release presentation v1.0
byNNiTInvestor
 
PDF
Q2 2018 financial release presentation v1.0
byNNiTInvestor
 
PPT
ACG Report
bykkrasynska
 
PDF
Beazley results 2014
byCompany Spotlight
 
PDF
Beazley
byCompany Spotlight
 
PDF
Beazley - Interim Results announcement
byCompany Spotlight
 
PPTX
Financial Statement Analysis - 2009 presentation
byFelix Yamasato
 
PDF
Beazley - Interim Results 2014
byCompany Spotlight
 
PPTX
Ppt on wealth maximization
byRaniPoojaSingh
 
PPS
Presentation for the ACG Cup
bytujwal
 
Creighton team acg cup 2015 final round v final 2
byLin Zhangde
 
ACG Cup Presentation - Round 1
byMilton Parra
 
operating assumption change
byCWA Shah Alam Tremendous Wealth Advisors
 
P&g presentation
byElisa Reyes
 
GMED
byMesfin Symons
 
P&G financial analysis, spring 2014
byEcaterina Barbus
 
ACG Cup 2nd round case competition final presentation
byliujingyi
 
Thermo Fisher Scientific Inc
byMesfin Symons
 
Q2 2018 financial release presentation v1.0
byNNiTInvestor
 
Q2 2018 financial release presentation v1.0
byNNiTInvestor
 
ACG Report
bykkrasynska
 
Beazley results 2014
byCompany Spotlight
 
Beazley
byCompany Spotlight
 
Beazley - Interim Results announcement
byCompany Spotlight
 
Financial Statement Analysis - 2009 presentation
byFelix Yamasato
 
Beazley - Interim Results 2014
byCompany Spotlight
 
Ppt on wealth maximization
byRaniPoojaSingh
 
Presentation for the ACG Cup
bytujwal
 

Viewers also liked

PDF
MICROSOFT COMPUTER
byMlu Tolo
 
PPTX
art of Insanity
bySabrina Alonzo
 
PDF
Idee Pratiche: 10 Passi Per Realizzare
byCaterina Giannottu
 
DOCX
Red informatica
byValentina Corredor Roldan
 
TXT
Readme
bymohit nautiyal
 
PPT
Team Update
bysubirkdas
 
PDF
Erinn Campbell New Resume
byErinn Campbell
 
PPT
Survey Results
bysubirkdas
 
PDF
Certificate IV in Fitness SRF40206 TAFE Transcript P3
byBen Wildey
 
PPTX
Modelos de desarrollo de software
byMauricio Chura Beltran
 
PDF
'Unfair advantage' Campaign Salesforce the Netherlands
byGillian Nieboer
 
PPT
Nicki minaj
byguest10347e
 
PPT
Nicki Minaj
byguest10347e
 
PDF
IMS Mobile in LATAM Study
byElsa Vences
 
PDF
Display landscape jp2016 ExchangeWire-Japan_updated090516
byExchangeWire Japan
 
PPTX
The origins of language
byBarozh
 
PPTX
200 Days of Code, Beginner Track, Month 5
byRyne McCall
 
MICROSOFT COMPUTER
byMlu Tolo
 
art of Insanity
bySabrina Alonzo
 
Idee Pratiche: 10 Passi Per Realizzare
byCaterina Giannottu
 
Red informatica
byValentina Corredor Roldan
 
Readme
bymohit nautiyal
 
Team Update
bysubirkdas
 
Erinn Campbell New Resume
byErinn Campbell
 
Survey Results
bysubirkdas
 
Certificate IV in Fitness SRF40206 TAFE Transcript P3
byBen Wildey
 
Modelos de desarrollo de software
byMauricio Chura Beltran
 
'Unfair advantage' Campaign Salesforce the Netherlands
byGillian Nieboer
 
Nicki minaj
byguest10347e
 
Nicki Minaj
byguest10347e
 
IMS Mobile in LATAM Study
byElsa Vences
 
Display landscape jp2016 ExchangeWire-Japan_updated090516
byExchangeWire Japan
 
The origins of language
byBarozh
 
200 Days of Code, Beginner Track, Month 5
byRyne McCall
 

Similar to Capital Presentation_Final

PPTX
project final
byTianyue Wang
 
PPTX
WDFC Presentation (1)
byHongliao Xiong
 
PPTX
CFA Global Champion PowerPoint
byKevin Monheim
 
PDF
CFA_Challenge_PPT_SSS
byRyan Zimmer
 
PPT
Why your business should have a business valuation by Decision Tree Financial
byKevin Wenke
 
DOCX
FRB Sales Page 1 of 30-1MM 1-3MM 3-5MM 5-10MM 10-25MM 25MM.docx
byhanneloremccaffery
 
PPTX
Presentation
byJordan Parker
 
PPTX
CFA Presentation UVU 2014
byBrian Fischer
 
PPTX
CFA Equity Research Competition
byShane Chung
 
PPTX
Due Diligence-Financial & Operations Risk Analysis & Assessment
byTony Wayne
 
PPTX
The ABC's of Business Valuation
byTurnerBusiness
 
PDF
Use These Five Step to Ensure the Future Success of Your Business
byMatthew Wirgau
 
PDF
10. eva tree analysis of financial statement (deb sahoo)
byDeb Sahoo, MBA(Finance), MS(EE), BTech(EE),
 
PPTX
AFS-Biafo Industies.pptx
byMUHAMMADBILAL1751
 
PPT
Bare Metal V7 (No Notes)
byJFHoward
 
PPTX
FIN 667 Hershey Valuation PPT- Final
byLisa Lee
 
PDF
WFM - Initiating Coverage - Report
byAlessandro Masi
 
PPTX
Pitchbook - Complete.pptx
byFuadHaciyeff
 
PPT
FUNDAMENTAL ANALYSIS.ppt mmmmmmmmmmmmmmmmmmmmmmmmmmmm
byuday231983
 
PPT
Selling Your Business Tutorial
byAnthony Vincent
 
project final
byTianyue Wang
 
WDFC Presentation (1)
byHongliao Xiong
 
CFA Global Champion PowerPoint
byKevin Monheim
 
CFA_Challenge_PPT_SSS
byRyan Zimmer
 
Why your business should have a business valuation by Decision Tree Financial
byKevin Wenke
 
FRB Sales Page 1 of 30-1MM 1-3MM 3-5MM 5-10MM 10-25MM 25MM.docx
byhanneloremccaffery
 
Presentation
byJordan Parker
 
CFA Presentation UVU 2014
byBrian Fischer
 
CFA Equity Research Competition
byShane Chung
 
Due Diligence-Financial & Operations Risk Analysis & Assessment
byTony Wayne
 
The ABC's of Business Valuation
byTurnerBusiness
 
Use These Five Step to Ensure the Future Success of Your Business
byMatthew Wirgau
 
10. eva tree analysis of financial statement (deb sahoo)
byDeb Sahoo, MBA(Finance), MS(EE), BTech(EE),
 
AFS-Biafo Industies.pptx
byMUHAMMADBILAL1751
 
Bare Metal V7 (No Notes)
byJFHoward
 
FIN 667 Hershey Valuation PPT- Final
byLisa Lee
 
WFM - Initiating Coverage - Report
byAlessandro Masi
 
Pitchbook - Complete.pptx
byFuadHaciyeff
 
FUNDAMENTAL ANALYSIS.ppt mmmmmmmmmmmmmmmmmmmmmmmmmmmm
byuday231983
 
Selling Your Business Tutorial
byAnthony Vincent
 

Capital Presentation_Final

  • 1.
    CFA Challenge Capital University MattClaborn Nolan Gladieux Logan Stout Tanner Segro
  • 2.
    Business Description • Foundedin 1938 • Declared bankruptcy in 2007 due to high volume of asbestos lawsuits • Management has stayed the same since bankruptcy • FY 2015 earnings exceeded expectations 34% 34% 32% Percent of Revenue - 2015 Roofing Insulation Composites Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Owens Corning (OC) Roofing 99% U.S./Canada Insulation 84% U.S./Canada Ind. Comp. 39% U.S./Canada
  • 3.
    Industry Overview • 3major competitors – Combine for 90% of U.S. market • Asphalt 1 of 3 raw materials Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Owens Corning (OC) Roofing 99% U.S./Canada Insulation 84% U.S./Canada Ind. Comp. 39% U.S./Canada • Largest U.S. manufacturer • 80% of sales from new construction • Mostly private and Chinese competition • Capacity driven pricing due to fixed cost investment • Recent acquisition - $80M price 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Total Earnings COMPOSITES TOTAL BUILDING MATERIALS 30% Average Composites % of Earnings
  • 4.
    Investment Summary • Positivenear term factors: • Tight composite capacity • Operating above 90% Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
  • 5.
    Investment Summary • Positivenear term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion 4.1% 1.0% 1.8% 2.8% 3.8% 3.3% 2.7% 1.8% -0.3% -2.8% 2.5% 1.6% 2.2% 1.5% 2.4%2.3%2.5%2.3% 2.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% U.S. GDP Growth
  • 6.
    Investment Summary • Positivenear term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion 1 10 100 1000 10000 TotalU.S.HousingStarts(millions) U.S. Housing Starts Housing Starts - US
  • 7.
    0 500 1000 1500 2000 2500 3000 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SquaeFeet U.S. Median NewHome SquareFootage Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 • Continued Increase in Home Size • ~25% increase since 2000 Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
  • 8.
    $0 $20 $40 $60 $80 $100 $120 $140 $160 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 West Texas CrudeOil Price per Barrel Investment Summary • Positive near term factors: • Tight composite capacity • Operating above 90% • U.S. GDP Expansion Forecast • 2.0 - 2.5% increase for 2016-2018 • Increasing U.S. Housing Starts • 10% YoY increase through 2017 • Continued Increase in Home Size • ~25% increase since 2000 • Low oil price • Lowest price in 12 years Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
  • 9.
    Valuation Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • $61-$65using DCF • Rev. increase 6.6%, 4.7%, and 2.7% 2016-18 • Op. costs increase 2.5%, 2.4%, and 2.1% 2016-18 Bull • $40-$45 • Sales and operating costs match prior 5 year avg.Base • $33-$35 • Assumes no growth in US Housing Starts, and US GDP at half of current estimatesBear
  • 10.
    Valuation Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion • Validatedwith Monte Carlo Simulation • Calculated beta: 1.25 • 9 years with S&P 500 • DDM not appropriate • Limited dividend history Monte-Carlo Simulation
  • 11.
    Financial Analysis Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion •Increasing EBIT and net margins • DuPont Analysis • Total Asset Turnover • Net Profit Margins • Consistent inventory management 0 20 40 60 80 100 120 2010-12 2011-12 2012-12 2013-12 2014-12 2015A Days Inventory On Hand OC MHK PPG
  • 12.
    Financial Analysis Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion •Maintaining a BBB- Credit Rating • No more levered than the industry 31% 69% Capital Structure 2010 Debt Equity 0% 10% 20% 30% 40% 50% 60% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Industry Debt Structure PPG OC MHK 35% 65% Capital Structure 2015 Debt Equity
  • 13.
    Economic Slowdown Competitive Pricing Bankruptcy Credit Downgrade Commodity Pricing Interest Rate Environment Investment Risks Business Description Industry Overviewand Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion
  • 14.
    Summary and Conclusion Aninvestment operation is one which upon thorough analysis promises safety of principal and adequate return (Graham, 1973) 1. Thoroughly analyze the company the soundness of its business • No additional risks compared to competitors • Bankruptcy a one time event 2. Deliberately protect against serious losses • Base is likely worst case 3. Aspire to adequate, not extraordinary performance • Bull is meeting current macro expectations Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Current Price: $40.52 (2/12/2016) Price Target: $61+ (51% Increase) Recommendation: Buy
  • 15.
  • 16.
    Is the firmgenerating sufficient profits? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Gross Margin Sales – Cost of Goods Sold $945 $956 $1,028 $797 $966 $976 EBIT Net Income + Interest + Taxes $304 $206 $461 $74 $385 $392 EBITDA Net Income + Interest + Taxes + Dep./Amor/ $628 $526 $779 $423 $717 $696 Earnings Per Share (EPS) Net Income / Average Shares Outstanding $2.76 $7.94 $2.35 -$0.16 $1.74 $1.92 Gross Margin % (Sales – Cost of Goods Sold) / Sales 18.1% 19.1% 19.3% 15.4% 18.2% 18.5% Profit Margin % Net Income / Sales 6.2% 18.7% 5.2% -0.4% 3.9% 4.3% Return On Assets (ROA) Net Income / Average Total Assets 4.3% 13.0% 3.7% -0.3% 2.7% 3.0% Return On Invested Capital (ROIC) Net Income / Average(Long Term Liab. + Tot. Eq.) 5.0% 15.0% 4.2% -0.3% 3.1% 3.4% Return On Equity (ROE) Net Income / Average Shareholder Equity 8.8% 25.6% 7.5% -0.5% 5.4% 6.1%
  • 17.
    How efficiently isthe firm utilizing its assets? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Working Capital Current Assets – Current Liabilities $713 $453 $728 $706 $856 $824 Working Capital Turnover Sales / Average (Current Assets – Current Liabilities) 7.3 11.03 7.33 7.33 6.19 6.40 Asset Turnover Sales / Average Total Assets 0.70 0.70 0.71 0.68 0.69 0.70 A/R Turnover Sales / Average Accounts Receivable 8.4 9.2 8.7 8.6 7.8 7.8 Days Sales Outstanding (DSO) 365 /Accounts Receivable Turnover 44 40 42 42 47 47 Inventory Turnover Cost of Goods Sold / Average Inventory 5.6 6.5 5.4 5.6 5.3 5.3 Days Inventory On-Hand 365 / Inventory Turnover 65 56 67 66 68 69
  • 18.
    How effectively isthe firm using its financial capital? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 Current Ratio Current Assets / Current Liabilities 1.75 1.47 1.80 1.78 1.86 1.84 Acid Test Ratio (Cash + Accounts Receivable) / Current Liabilities 0.72 0.63 0.73 0.72 0.75 0.75 Debt Ratio Total Liabilities / Total Assets 0.51 0.49 0.51 0.53 0.50 0.51 Debt-to-Equity Total Liabilities / Total Equity 1.04 0.96 1.03 1.14 1.02 1.05 Assets-to-Equity Total Assets / Total Equity 2.04 1.96 2.03 2.14 2.02 2.05 Times Interest Earned EBIT / Interest Expense 2.72 1.87 4.27 0.65 3.44 3.44 Free Cash Flow CF from Op. Act. + CF from Inv. Act. $85.20 $239 -$156 $77 $111 $155 Free Cash Flow % Free Cash Flow / Revenue 1.63% 4.78% -2.92% 1.49% 2.10% 2.94%
  • 19.
    Is the firmcreating appropriate shareholder value? Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Measure Calculation 5-Yr Avg. 2010 2011 2012 2013 2014 PE Ratio Market Price Per Share / Earnings Per Share 17.00 3.92 12.23 0.00 23.44 18.57 Market Capitalization Market Price / Share x Num. Shares Outstanding $5,507 $0 $0 $0 $0 $0 Market Value Added (MVA) Total Market Value – Total Equity $1,833 -$3,648 -$3,701 -$3,538 -$3,793 -$3,692 Dividend Yield Ratio Dividends per Share / Market Price per Share 1.45% 0.00% 0.00% 0.00% 0.00% 0.00% Dividend Payout Dividends / Net Income 25% 0% 0% 0% 0% 0% Price to Sales Market Price Per Share / Revenue Per Share 1.06 0.73 0.63 0.87 0.90 0.80
  • 20.
    WACC Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Table 3:WACC Analysis Risk Free Rate 2.26% Calculated Beta 1.25 Market Risk Premium 6.63% CAPM 10.55% Weight of Equity 73% Weighted Cost Equity 7.74% Avg. Bond Market Value 5.35% Tax Rate 20.79% Weight of Debt 27% Weighted Cost of Debt 1.13% Weighted Cost Equity 7.74% Weighted Cost Debt 1.13% WACC 8.87%
  • 21.
    Valuation – BullCase Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Terminal Revenue $5,343 $5,696 $5,963 $6,124 $6,210 $6,297 Operating Costs (Revenue - EBIT) $4,843 $4,964 $5,083 $5,190 $5,216 $5,242 Taxes $135 $88 $211 $224 $288 $306 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 29.0% 29.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $551 $576 $617 $613 $656 $10,303 Time Horizon 3-yr 5-yr Enterprise Value $7,484,060,833 $7,178,681,117 Shares Outstanding 116,470,000 116,470,000 Price Target $64.26 $61.64
  • 22.
    Valuation – BaseCase Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Terminal Revenue $5,343 $5,418 $5,494 $5,571 $5,649 $5,728 Operating Costs (Revenue - EBIT) $4,843 $4,867 $4,892 $4,916 $4,941 $4,965 Taxes $135 $66 $145 $157 $205 $221 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 29.0% 29.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $392 $365 $405 $410 $449 $7,895 Time Horizon 3-yr 5-yr Enterprise Value $5,163,840,482 $4,725,373,589 Shares Outstanding 116,470,000 116,470,000 Price Target $44.34 $40.57
  • 23.
    Valuation – BearCase Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix Year 2015E 2016E 2017E 2018E 2019E 2020E Revenue $5,343 $5,438 $5,539 $5,635 $5,725 $5,811 Operating Costs (Revenue - EBIT) $4,843 $4,903 $4,968 $5,028 $5,088 $5,149 Taxes $135 $64 $137 $146 $153 $159 Tax Percent (Taxes / Net Income) 12.0% 12.0% 24.0% 24.0% 24.0% 24.0% Net Investment (Net Investing Cashflow - Depreciation) $83 $0 $0 $0 $0 $0 Net Investment % (Net Investment / Revenue) 1.6% 0.0% 0.0% 0.0% 0.0% 0.0% Chg in Working Cap. (Cur. Ass. Year 1 - Curr. Liab. Year 2) - (Cur. Ass. Year 1 - Curr. Liab Year 1) $37 $93 $93 $93 $93 $93 FCF (Rev. - Op. Costs - Taxes - Net Inv. - Chg. In Working Cap) $245 $378 $341 $369 $391 $410 Time Horizon 3-yr 5-yr Enterprise Value $4,060,676,518 $3,816,847,550 Shares Outstanding 116,470,000 116,470,000 Price Target $34.86 $32.77
  • 24.
    Multiple Linear Regression– Total Bldg Materials Sales Initial Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix SUMMARY OUTPUT TOTAL BUILDING MATERIALS Regression Statistics Regre Multiple R 0.941954803 R Square 0.887278851 Adjusted R Square 0.84500842 Standard Error 349.9243637 Observations 23 ANOVA df SS MS F Significance F Regression 6 15421373.99 2570228.999 20.99053249 9.4977E-07 Residual 16 1959152.966 122447.0603 Total 22 17380526.96 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -3767.823534 4913.485029 -0.76683322 0.454347572 -14183.9465 6648.299416 -14183.9465 6648.299416 Housing Starts 0.112589543 0.032951011 3.416876801 0.003532102 0.042736522 0.182442565 0.042736522 0.182442565 U.S. GDP - AVERAGE 0.235494806 0.209436364 1.124421765 0.277420905 -0.20849045 0.679480063 -0.20849045 0.679480063 Producer Price Index (Asphalt) 12.72645558 9.474461789 1.343237839 0.197938691 -7.35850618 32.81141733 -7.35850618 32.81141733 China GDP - AVERAGE -0.00181447 0.001332834 -1.36136277 0.192264033 -0.00463995 0.001011011 -0.00463995 0.001011011 U.S. Unemployment Rate Average -31.22599436 104.7669102 -0.29805207 0.769499017 -253.321923 190.8699339 -253.321923 190.8699339 U.S. Median Weekly Earnings 3.487190146 20.37816303 0.171123871 0.866271793 -39.7125856 46.68696594 -39.7125856 46.68696594
  • 25.
    Multiple Linear Regression– Total Bldg Materials Sales Final Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix SUMMARY OUTPUT TOTAL BUILDING MATERIALS Regression Statistics Multiple R 0.924022853 R Square 0.853818233 Adjusted R Square 0.83989616 Standard Error 347.9472165 Observations 24 ANOVA df SS MS F Significance F Regression 2 14849719.38 7424859.692 61.32838355 1.70364E-09 Residual 21 2542412.575 121067.2655 Total 23 17392131.96 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -2520.401851 539.1752296 -4.67455052 0.000129688 -3641.67812 -1399.12558 -3641.67812 -1399.12558 Housing Starts 1.257373201 0.169459854 7.419888394 2.69374E-07 0.904962144 1.609784259 0.904962144 1.609784259 U.S. GDP - AVERAGE 0.330756562 0.033631356 9.834767234 2.5917E-09 0.260816328 0.400696796 0.260816328 0.400696796
  • 26.
    Multiple Linear Regression– Total COGS Final Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix
  • 27.
    Linear Regression Example– Total Sales vs. U.S. GDP Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix y = 0.4109x - 450.21 R² = 0.7465 0 1000 2000 3000 4000 5000 6000 7000 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 OCTotalSales U.S. GDP (millions) Total Sales vs. U.S. GDP (1991-2014)
  • 28.
    Linear Regression Example– Total Sales vs. U.S. GDP Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix
  • 29.
    Linear Regression Example– Total COGS vs. West Texas Crude Oil Price Business Description Industry Overview and Competitive Positioning Investment Summary Valuation Financial Analysis Investment Risks Summary and Conclusion Appendix y = 19.336x + 2774.6 R² = 0.5267 0.0 1000.0 2000.0 3000.0 4000.0 5000.0 6000.0 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 Total COGS vs. WestTexas Crude Price Series1 Linear (Series1)