The document summarizes Hindenburg Research's analysis of Eros International's recent earnings report, which found several red flags:
1) Eros claims to be well-capitalized but plans a shelf offering and recently sold shares in its key subsidiary, suggesting ongoing liquidity issues.
2) Financing costs are spiking and short-term debt is high, while a promised debt refinancing deal has still not materialized.
3) Revenue declines in key markets were offset by questionable growth in "Rest of World", and receivables and days sales outstanding metrics point to ongoing collection problems.
4) The reported doubling of Eros' content library is difficult to reconcile with financials and the
Fifth Third Bancorp reported 2006 earnings of $1.2 billion compared to $1.5 billion in 2005. Fourth quarter 2006 earnings were $66 million compared to $377 million in the previous quarter and $332 million in the same quarter of 2005. Results were negatively affected by $454 million in losses from actions taken to improve the balance sheet profile by reducing securities and borrowing. Core deposit and loan growth was solid but was offset by lower noninterest income, mainly due to the $411 million in securities losses. Credit costs were in line with expectations and the company is optimistic about continued momentum in 2007 from further growth opportunities.
Nagacorp operates the only casino in Cambodia through a monopoly license until 2045. It has several competitive advantages over casinos in Macau and other markets, including much lower operating costs due to lower wages and taxes in Cambodia. While the casino is currently closed due to COVID, the document argues that Nagacorp is undervalued given its long-term license, expected reopening in October, and potential for growth through a planned expansion. The analyst provides forecasts suggesting the share price could increase 60-80% by 2023 and over 400% by 2027 based on Nagacorp achieving pre-COVID revenue levels.
Apple Hospitality REIT is recommended as a Buy with a target price of $20.06. Key points include:
- Apple maintains low leverage and debt levels compared to peers, funding future acquisitions through its credit facility.
- The portfolio of 179 hotels across 32 states provides geographic diversification and consistent performance across diverse demand drivers.
- Demand is expected to continue outpacing new hotel room supply through 2017. Apple focuses on upscale select service hotels where new room growth will be strong.
- Valuation analyses including DCF, NAV, and peer comparisons estimate Apple's fair value at $20.52, supported by a monthly dividend yield of 6.56%, balance sheet capacity
Nagacorp operates the only casino in Cambodia through a monopoly license until 2045. It has several competitive advantages over casinos in Macau and other markets, including much lower operating costs due to lower wages and taxes in Cambodia. While the casino is currently closed due to COVID, the document argues that Nagacorp is undervalued given its long-term license, expected reopening in October, and potential for growth through a planned expansion. The analyst provides earnings estimates and price targets suggesting significant upside for the stock as business recovers over the next few years.
The document provides details of PAX Global's 2020 interim earnings call, including financial highlights and Q&A. Key points include:
- Revenue increased 7.4% driven by overseas growth, with gross and operating margins up as well.
- Receivables impairments included provisions for some APAC and US customers, including less than $10 million related to Wirecard.
- Financial targets for 2020 were maintained or increased despite COVID-19 uncertainties, aiming for flat revenue growth but higher gross and operating margins.
- Questions from analysts focused on conservative 2020 targets implying a weaker second half, and details on receivables impairments.
CFA Research Challenge - Equity Research Report - G4S Rory Blundell
This document provides an investment recommendation and analysis of G4S plc. It recommends holding G4S shares with a target price of 243p based on discounted cash flow analysis and focuses on the company's future capital structure. Key points include G4S undergoing organizational changes like disposing of non-core businesses and improving core activities. It is also focusing on organic growth and reducing debt. Emerging markets are seen as growth areas while some reputational issues remain in the UK.
- From October to December 2014, Crystal Cove Capital achieved an 11.3% return compared to 10.3% for the S&P 500. While pleased with the outperformance, the manager cautions that short-term results are difficult to predict.
- Institutional investors who focus on short-term gains face pressures that can hurt long-term performance, such as high taxes on short-term capital gains. Long-term investing provides tax and competitive advantages.
- One underappreciated opportunity is companies with leverage, such as cable companies, which have steadily increasing cash flows that naturally pay down debt over time with limited default risk.
Fifth Third Bancorp reported earnings per share of $0.65 for the first quarter of 2006, down from $0.72 in the first quarter of 2005. Net income totaled $363 million, down from $405 million in the first quarter of 2005. Earnings declined due to margin compression from interest rate changes and mix shifts toward higher-cost deposits. Credit quality improved over the previous quarter and management expects core trends to stabilize margins and improve performance going forward.
Fifth Third Bancorp reported 2006 earnings of $1.2 billion compared to $1.5 billion in 2005. Fourth quarter 2006 earnings were $66 million compared to $377 million in the previous quarter and $332 million in the same quarter of 2005. Results were negatively affected by $454 million in losses from actions taken to improve the balance sheet profile by reducing securities and borrowing. Core deposit and loan growth was solid but was offset by lower noninterest income, mainly due to the $411 million in securities losses. Credit costs were in line with expectations and the company is optimistic about continued momentum in 2007 from further growth opportunities.
Nagacorp operates the only casino in Cambodia through a monopoly license until 2045. It has several competitive advantages over casinos in Macau and other markets, including much lower operating costs due to lower wages and taxes in Cambodia. While the casino is currently closed due to COVID, the document argues that Nagacorp is undervalued given its long-term license, expected reopening in October, and potential for growth through a planned expansion. The analyst provides forecasts suggesting the share price could increase 60-80% by 2023 and over 400% by 2027 based on Nagacorp achieving pre-COVID revenue levels.
Apple Hospitality REIT is recommended as a Buy with a target price of $20.06. Key points include:
- Apple maintains low leverage and debt levels compared to peers, funding future acquisitions through its credit facility.
- The portfolio of 179 hotels across 32 states provides geographic diversification and consistent performance across diverse demand drivers.
- Demand is expected to continue outpacing new hotel room supply through 2017. Apple focuses on upscale select service hotels where new room growth will be strong.
- Valuation analyses including DCF, NAV, and peer comparisons estimate Apple's fair value at $20.52, supported by a monthly dividend yield of 6.56%, balance sheet capacity
Nagacorp operates the only casino in Cambodia through a monopoly license until 2045. It has several competitive advantages over casinos in Macau and other markets, including much lower operating costs due to lower wages and taxes in Cambodia. While the casino is currently closed due to COVID, the document argues that Nagacorp is undervalued given its long-term license, expected reopening in October, and potential for growth through a planned expansion. The analyst provides earnings estimates and price targets suggesting significant upside for the stock as business recovers over the next few years.
The document provides details of PAX Global's 2020 interim earnings call, including financial highlights and Q&A. Key points include:
- Revenue increased 7.4% driven by overseas growth, with gross and operating margins up as well.
- Receivables impairments included provisions for some APAC and US customers, including less than $10 million related to Wirecard.
- Financial targets for 2020 were maintained or increased despite COVID-19 uncertainties, aiming for flat revenue growth but higher gross and operating margins.
- Questions from analysts focused on conservative 2020 targets implying a weaker second half, and details on receivables impairments.
CFA Research Challenge - Equity Research Report - G4S Rory Blundell
This document provides an investment recommendation and analysis of G4S plc. It recommends holding G4S shares with a target price of 243p based on discounted cash flow analysis and focuses on the company's future capital structure. Key points include G4S undergoing organizational changes like disposing of non-core businesses and improving core activities. It is also focusing on organic growth and reducing debt. Emerging markets are seen as growth areas while some reputational issues remain in the UK.
- From October to December 2014, Crystal Cove Capital achieved an 11.3% return compared to 10.3% for the S&P 500. While pleased with the outperformance, the manager cautions that short-term results are difficult to predict.
- Institutional investors who focus on short-term gains face pressures that can hurt long-term performance, such as high taxes on short-term capital gains. Long-term investing provides tax and competitive advantages.
- One underappreciated opportunity is companies with leverage, such as cable companies, which have steadily increasing cash flows that naturally pay down debt over time with limited default risk.
Fifth Third Bancorp reported earnings per share of $0.65 for the first quarter of 2006, down from $0.72 in the first quarter of 2005. Net income totaled $363 million, down from $405 million in the first quarter of 2005. Earnings declined due to margin compression from interest rate changes and mix shifts toward higher-cost deposits. Credit quality improved over the previous quarter and management expects core trends to stabilize margins and improve performance going forward.
The financial performance of ELB Company improved from 2017 to 2018 based on an analysis of its financial statements. While revenues and gross profits increased, net profits decreased due to rising costs of goods sold and administrative expenses. Current assets grew but cash levels fell, and current liabilities increased. Liquidity ratios showed the company could meet short-term obligations. To further improve, management should reduce debt, costs, and expenses.
The Greenlight Capital funds returned -4.9% in Q4 2012, bringing the year-to-date return to 7.9%. Since inception in 1996, Greenlight Capital has returned 1,829% cumulatively. The disappointing Q4 performance reduced the year from good to average. Losses in short positions, particularly Green Mountain Coffee Roasters, and declines in Apple shares hurt performance. Some long positions like General Motors gained. The macro book achieved a small profit from gains in shorting the Yen, though gold and European sovereign debt declined.
- Cooper is a 21-year-old college student with a current net worth of $8,000-$10,000 who is graduating next year and expects to earn $35,000-$45,000 annually.
- His investment objectives are capital appreciation and growth to increase his net worth before focusing more on income when he is older.
- His initial $3,000 portfolio will include individual stocks like Shiloh Industries and Ryder Systems as well as growth-oriented mutual funds to achieve higher returns through diversification.
Fifth Third Bancorp reported third quarter 2006 earnings of $0.68 per diluted share, down 1% from the previous quarter and 4% from the third quarter of 2005. Net income for the quarter totaled $377 million, a 1% decrease from last quarter and a 5% decrease from the prior year period. While net interest income was relatively flat compared to last quarter, it declined 3% year-over-year due to margin compression. Noninterest income grew 1% sequentially and 6% year-over-year, led by increases in electronic payment processing and corporate banking revenues. Credit costs remained stable compared to previous quarters.
This document provides a summary of the Indian private equity market in 2012. It finds that while deal activity has been mixed, rigorous due diligence can lead to rewarding results. It notes that the number of exits declined in 2011, creating discomfort for investors. However, the long-term potential of India remains strong due to factors like demographics, industrial growth, and infrastructure needs. Key sectors for private equity investment are seen as e-commerce, IT/ITES, and pharmaceuticals. Exits are expected to remain challenging until stock market conditions improve.
Emerging Trends in Corporate Finance - Sources of Corporate Financing and La...Resurgent India
There is a flurry of activities in the IPO space following stabilizing trends in the stock markets. Increasing number of companies are looking to raise funds to finance their business expansion and loan repayments and to meet the working capital requirements
Client Alert: August 2012
Alice Simons discusses the primary objectives of the ESOP advocacy efforts in Congress and explains how you can schedule and prepare for a visit with your member of Congress. Brian Wurpts discusses strategies for mature ESOP companies to utilize their excess capital, with a focus on the option of distributing plan assets to participants.
Fifth Third Bancorp reported higher earnings per share and net income in the fourth quarter of 2005 compared to the same period in 2004. Return on assets and equity also increased. However, revenue trends were below expectations for the full year due to disappointing deposit growth and interest rate changes. Credit quality trends reflected increased losses from commercial airline bankruptcies and consumer personal bankruptcies.
The document analyzes the financial statements of five major railroad companies in the United States over four years from 2005 to 2008. It calculates several ratios to evaluate the companies' performance and determine which would be the best investment. According to the return on investment, debt ratio, profit margin, and current ratio analyses, Norfolk Southern Corporation and Union Pacific Corporation exhibited the strongest financial positions among the companies.
ITC is an Indian conglomerate headquartered in Kolkata with diversified businesses including FMCG, hotels, paper, packaging, agriculture, and IT. According to the financial analysis, ITC has total assets of INR 62381.31 Cr. and total equity of INR 51400.07 Cr. as of 2018. While ITC's sales have decreased in recent years, the company has been able to increase net profits through cost reductions and other income sources. The ratio analysis shows ITC has a strong liquidity position and returns, though it could improve by addressing its declining sales and under-leveraging of debt.
This document summarizes recent trends in corporate financing in India. It notes that India's macroeconomic indicators have improved, placing the economy and stock markets in a better state. It then discusses trends in the primary and secondary markets over the past year. The primary market saw a 23% increase in total resources mobilized in 2014-15 compared to the prior year. In the secondary market, the BSE Sensex and NSE Nifty indexes increased over the past year. The document then discusses the various sources of corporate financing available, including an increased activity in IPOs as companies seek to raise funds for expansion. SEBI has also taken steps to improve the IPO process and encourage listings of startups and SMEs.
Zee Entertainment Enterprises: Good quarter; near-term outlook weak - Prabhud...IndiaNotes.com
- Zee Entertainment reported quarterly earnings above estimates driven by higher revenues and margins. Advertising revenues grew 21.5% year-over-year outpacing industry growth.
- While near-term outlook is weak due to delays in implementation of television digitization, the company expects industry advertising growth to remain in the double digits for the full fiscal year.
- The report maintains a "Buy" rating for Zee Entertainment, seeing the benefits of digitization being realized in the long-run through consistent earnings growth and a strong balance sheet.
This document provides an investment recommendation and analysis of La-Z-Boy, Inc. (LZB) by John Milligan. Milligan initiates coverage of LZB with a BUY rating based on their lower cost operating model from supply chain improvements, quantifiable 4-4-5 strategy to increase retail stores and sales, and ample liquidity. Some risks include currency translation effects from a strong US dollar and supply concentration. Financial projections estimate continued revenue and profit growth through 2020. The analysis provides an industry and competitive overview of the home furnishings sector and positions LZB as the second largest US furniture manufacturer.
- Fifth Third Bancorp reported second quarter 2006 earnings per share of $0.69, down from $0.75 in second quarter 2005. Net income was $382 million compared to $417 million in second quarter 2005.
- Noninterest income increased 5% from second quarter 2005, driven by increases in electronic payment processing and deposit service revenues. Mortgage banking revenues totaled $41 million.
- Average deposits increased 7% and average loans and leases increased 9% from second quarter 2005. However, net interest income decreased 5% and net interest margin declined due to higher deposit and funding costs compressing margins.
Fifth Third Bancorp reported an 11% increase in fourth quarter earnings per share compared to the same period the previous year. Net income for the quarter totaled $460.5 million, a 9% rise over fourth quarter 2002. Loan balances grew significantly by $6.4 billion for the full year, driven by strong consumer lending and commercial loan growth. Deposit growth was also robust, with demand deposits and interest checking increasing by 18% and 9% respectively compared to fourth quarter 2002.
- Eros International claims to be well-capitalized, yet has sold shares in its key subsidiary and plans a shelf offering for additional capital, suggesting ongoing liquidity issues.
- The company's financing costs have spiked significantly and it faces over $260 million in short-term debt and contractual obligations due within the year.
- Hindenburg Research has numerous questions about Eros' accounting, revenues, receivables, content library additions and film slate investments that the company has not adequately answered.
- Given the combination of liquidity risks, worsening financials, and unresolved accounting issues, Hindenburg believes Eros' problems could make the company insolvent within the next 6 months.
The Small Cap Focused Growth portfolio underperformed its benchmark in Q1 due to disappointing guidance from two large holdings, SPS Commerce and The Advisory Board, which fell 39% and 33% respectively. Additionally, investor sentiment turned negative towards the portfolio's focus on high secular growth stocks, favoring lower growth, lower volatility stocks. However, the portfolio manager remains confident that focusing on companies capable of sustained high growth will generate strong long-term returns, as short-term volatility in stock prices often diverges from long-term earnings potential.
Running Head: FINANCIAL ANALYSIS
1
FINANCIAL ANALYSIS
7
Financial Analysis
Students Name
Institutional Affiliation
Executive summaryThis report created from the financial statements of The Coca-Cola Company (KO) provides an analysis and evaluation of the actual and the prospective liquidity, profitability and the financial stability of the company. The methods that have been used in the analysis include trend analysis, the vertical analysis and the horizontal analysis. Also we have used certain analysis such as Quick ratio, debt ratio, and the current ratios. More calculations that have been used includes the returns on the owners equity, the earning per share, net operating working capital, total operating capital, net operating capital, net operating profit after taxes, operating cash flow and free cash flow. A result from the data reveals that, all the company ratios are above the industries averages. Comparative performance is good in the area of the liquidity, credit control and inventory management.
The report finds that the tidings for the company are positive in the near future. The major areas of weakness highlighted require further investigation and immediate action by management. The recommendations that were provided include;
· Improving the average accounts receivable collection period,
· Raising/ increasing the inventory turnover and reduction of prepayments in order to have enough operating cash for the subsequent periods.
The investigation in this report also had its shortcomings that arose and are highlighted as;
The forecasted figures used are estimates that sometimes maybe arbitrate; we also cannot fully provide data on the position of other companies with the data limitation we have experienced. The monthly details would have given us more information from which we could base a proper in year trend analysis, rather than the blanket whole year analysis provided. Though we had the above mentioned strain in preparation of this report, we still great belief that the analysis provided is best suited to show the standing of the Coca-Cola Company (KO).
In the financial report below, the strengths, weakness, opportunity and threats have been highlighted as we analyze the various financial sub segments.
Identify your company, its industry, and analyze the important segments (percentage of sales or subsidiaries) of your company compared to its industry and its overall business
The Coca-Cola Company (KO) is a multinational American Company that has its headquarters at Atlanta Georgia. The company has got its branches in more than 200 countries in the world and majority of its sales is in America, amounting to 40% of the total sales. The company operates in the non alcoholic beverage industry made up of the following companies as the main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi Inc. the company is the best performer in market capitalization compared to competitors with a capitalization of 169.49billion, higher .
Financials_FFH.TO_Hold_03_02_2015-3 (FInal Version)Alfredo Leon
The document provides an analysis of ACE Limited (TSX: FFH.TO) by the Babson College Fund Financials Sector Team. Key points include:
1) FFH.TO is rated "HOLD" with a price target of $699.97, representing potential upside of 6.7% from its current price of $656. The company has a unique investment philosophy and niche insurance products.
2) Strengths include improved underwriting results, uncorrelated market returns providing portfolio hedging, a diversified investment portfolio, and consistent book value growth. However, more analysis is needed due to current price uncertainty.
3) Risks include natural catastrophes, liquidity
- The document discusses Indiabulls Housing Finance Ltd, a large Indian mortgage financier. It provides an analysis of the company's strengths, governance issues, financial performance, and competitive positioning within the housing finance industry.
- While there are some perceived governance concerns around the parent company, the document argues these do not impact the mortgage business and that Indiabulls Housing Finance has a conservative balance sheet, strong profitability, and consistent financial performance.
- Based on the analysis, the document recommends buying Indiabulls Housing Finance, viewing it as undervalued relative to its quality and growth prospects within the Indian housing sector.
JPMorgan Chase reported record revenue and earnings for 2007. Key points:
- Total revenue was $71.4 billion, up 15% from 2006, and earnings were $15.4 billion.
- Most business lines achieved record or near-record earnings, but results were mixed with areas of weakness like mortgage trading.
- The Investment Bank had a record first half but struggled in the second half with difficult market conditions.
- Retail and card services grew customer accounts and sales, but earnings fell due to higher credit costs, especially in subprime mortgages.
- Commercial and treasury/securities services achieved record revenue and profits with strong loan and asset growth.
- Asset management
Desai Capital Management provides a summary of key factors they consider when conducting value screening to identify attractive investment opportunities. They look for companies with market caps over $3 billion that are in established industries with predictable competitive landscapes. Relative valuation metrics are analyzed against industry and historical averages to identify undervalued companies. Insider purchasing is viewed favorably as a sign that management sees upside. Activist investor campaigns can also bring attention to undervalued situations. Restatements, management turnover, and large unfunded pension liabilities are red flags.
The financial performance of ELB Company improved from 2017 to 2018 based on an analysis of its financial statements. While revenues and gross profits increased, net profits decreased due to rising costs of goods sold and administrative expenses. Current assets grew but cash levels fell, and current liabilities increased. Liquidity ratios showed the company could meet short-term obligations. To further improve, management should reduce debt, costs, and expenses.
The Greenlight Capital funds returned -4.9% in Q4 2012, bringing the year-to-date return to 7.9%. Since inception in 1996, Greenlight Capital has returned 1,829% cumulatively. The disappointing Q4 performance reduced the year from good to average. Losses in short positions, particularly Green Mountain Coffee Roasters, and declines in Apple shares hurt performance. Some long positions like General Motors gained. The macro book achieved a small profit from gains in shorting the Yen, though gold and European sovereign debt declined.
- Cooper is a 21-year-old college student with a current net worth of $8,000-$10,000 who is graduating next year and expects to earn $35,000-$45,000 annually.
- His investment objectives are capital appreciation and growth to increase his net worth before focusing more on income when he is older.
- His initial $3,000 portfolio will include individual stocks like Shiloh Industries and Ryder Systems as well as growth-oriented mutual funds to achieve higher returns through diversification.
Fifth Third Bancorp reported third quarter 2006 earnings of $0.68 per diluted share, down 1% from the previous quarter and 4% from the third quarter of 2005. Net income for the quarter totaled $377 million, a 1% decrease from last quarter and a 5% decrease from the prior year period. While net interest income was relatively flat compared to last quarter, it declined 3% year-over-year due to margin compression. Noninterest income grew 1% sequentially and 6% year-over-year, led by increases in electronic payment processing and corporate banking revenues. Credit costs remained stable compared to previous quarters.
This document provides a summary of the Indian private equity market in 2012. It finds that while deal activity has been mixed, rigorous due diligence can lead to rewarding results. It notes that the number of exits declined in 2011, creating discomfort for investors. However, the long-term potential of India remains strong due to factors like demographics, industrial growth, and infrastructure needs. Key sectors for private equity investment are seen as e-commerce, IT/ITES, and pharmaceuticals. Exits are expected to remain challenging until stock market conditions improve.
Emerging Trends in Corporate Finance - Sources of Corporate Financing and La...Resurgent India
There is a flurry of activities in the IPO space following stabilizing trends in the stock markets. Increasing number of companies are looking to raise funds to finance their business expansion and loan repayments and to meet the working capital requirements
Client Alert: August 2012
Alice Simons discusses the primary objectives of the ESOP advocacy efforts in Congress and explains how you can schedule and prepare for a visit with your member of Congress. Brian Wurpts discusses strategies for mature ESOP companies to utilize their excess capital, with a focus on the option of distributing plan assets to participants.
Fifth Third Bancorp reported higher earnings per share and net income in the fourth quarter of 2005 compared to the same period in 2004. Return on assets and equity also increased. However, revenue trends were below expectations for the full year due to disappointing deposit growth and interest rate changes. Credit quality trends reflected increased losses from commercial airline bankruptcies and consumer personal bankruptcies.
The document analyzes the financial statements of five major railroad companies in the United States over four years from 2005 to 2008. It calculates several ratios to evaluate the companies' performance and determine which would be the best investment. According to the return on investment, debt ratio, profit margin, and current ratio analyses, Norfolk Southern Corporation and Union Pacific Corporation exhibited the strongest financial positions among the companies.
ITC is an Indian conglomerate headquartered in Kolkata with diversified businesses including FMCG, hotels, paper, packaging, agriculture, and IT. According to the financial analysis, ITC has total assets of INR 62381.31 Cr. and total equity of INR 51400.07 Cr. as of 2018. While ITC's sales have decreased in recent years, the company has been able to increase net profits through cost reductions and other income sources. The ratio analysis shows ITC has a strong liquidity position and returns, though it could improve by addressing its declining sales and under-leveraging of debt.
This document summarizes recent trends in corporate financing in India. It notes that India's macroeconomic indicators have improved, placing the economy and stock markets in a better state. It then discusses trends in the primary and secondary markets over the past year. The primary market saw a 23% increase in total resources mobilized in 2014-15 compared to the prior year. In the secondary market, the BSE Sensex and NSE Nifty indexes increased over the past year. The document then discusses the various sources of corporate financing available, including an increased activity in IPOs as companies seek to raise funds for expansion. SEBI has also taken steps to improve the IPO process and encourage listings of startups and SMEs.
Zee Entertainment Enterprises: Good quarter; near-term outlook weak - Prabhud...IndiaNotes.com
- Zee Entertainment reported quarterly earnings above estimates driven by higher revenues and margins. Advertising revenues grew 21.5% year-over-year outpacing industry growth.
- While near-term outlook is weak due to delays in implementation of television digitization, the company expects industry advertising growth to remain in the double digits for the full fiscal year.
- The report maintains a "Buy" rating for Zee Entertainment, seeing the benefits of digitization being realized in the long-run through consistent earnings growth and a strong balance sheet.
This document provides an investment recommendation and analysis of La-Z-Boy, Inc. (LZB) by John Milligan. Milligan initiates coverage of LZB with a BUY rating based on their lower cost operating model from supply chain improvements, quantifiable 4-4-5 strategy to increase retail stores and sales, and ample liquidity. Some risks include currency translation effects from a strong US dollar and supply concentration. Financial projections estimate continued revenue and profit growth through 2020. The analysis provides an industry and competitive overview of the home furnishings sector and positions LZB as the second largest US furniture manufacturer.
- Fifth Third Bancorp reported second quarter 2006 earnings per share of $0.69, down from $0.75 in second quarter 2005. Net income was $382 million compared to $417 million in second quarter 2005.
- Noninterest income increased 5% from second quarter 2005, driven by increases in electronic payment processing and deposit service revenues. Mortgage banking revenues totaled $41 million.
- Average deposits increased 7% and average loans and leases increased 9% from second quarter 2005. However, net interest income decreased 5% and net interest margin declined due to higher deposit and funding costs compressing margins.
Fifth Third Bancorp reported an 11% increase in fourth quarter earnings per share compared to the same period the previous year. Net income for the quarter totaled $460.5 million, a 9% rise over fourth quarter 2002. Loan balances grew significantly by $6.4 billion for the full year, driven by strong consumer lending and commercial loan growth. Deposit growth was also robust, with demand deposits and interest checking increasing by 18% and 9% respectively compared to fourth quarter 2002.
- Eros International claims to be well-capitalized, yet has sold shares in its key subsidiary and plans a shelf offering for additional capital, suggesting ongoing liquidity issues.
- The company's financing costs have spiked significantly and it faces over $260 million in short-term debt and contractual obligations due within the year.
- Hindenburg Research has numerous questions about Eros' accounting, revenues, receivables, content library additions and film slate investments that the company has not adequately answered.
- Given the combination of liquidity risks, worsening financials, and unresolved accounting issues, Hindenburg believes Eros' problems could make the company insolvent within the next 6 months.
The Small Cap Focused Growth portfolio underperformed its benchmark in Q1 due to disappointing guidance from two large holdings, SPS Commerce and The Advisory Board, which fell 39% and 33% respectively. Additionally, investor sentiment turned negative towards the portfolio's focus on high secular growth stocks, favoring lower growth, lower volatility stocks. However, the portfolio manager remains confident that focusing on companies capable of sustained high growth will generate strong long-term returns, as short-term volatility in stock prices often diverges from long-term earnings potential.
Running Head: FINANCIAL ANALYSIS
1
FINANCIAL ANALYSIS
7
Financial Analysis
Students Name
Institutional Affiliation
Executive summaryThis report created from the financial statements of The Coca-Cola Company (KO) provides an analysis and evaluation of the actual and the prospective liquidity, profitability and the financial stability of the company. The methods that have been used in the analysis include trend analysis, the vertical analysis and the horizontal analysis. Also we have used certain analysis such as Quick ratio, debt ratio, and the current ratios. More calculations that have been used includes the returns on the owners equity, the earning per share, net operating working capital, total operating capital, net operating capital, net operating profit after taxes, operating cash flow and free cash flow. A result from the data reveals that, all the company ratios are above the industries averages. Comparative performance is good in the area of the liquidity, credit control and inventory management.
The report finds that the tidings for the company are positive in the near future. The major areas of weakness highlighted require further investigation and immediate action by management. The recommendations that were provided include;
· Improving the average accounts receivable collection period,
· Raising/ increasing the inventory turnover and reduction of prepayments in order to have enough operating cash for the subsequent periods.
The investigation in this report also had its shortcomings that arose and are highlighted as;
The forecasted figures used are estimates that sometimes maybe arbitrate; we also cannot fully provide data on the position of other companies with the data limitation we have experienced. The monthly details would have given us more information from which we could base a proper in year trend analysis, rather than the blanket whole year analysis provided. Though we had the above mentioned strain in preparation of this report, we still great belief that the analysis provided is best suited to show the standing of the Coca-Cola Company (KO).
In the financial report below, the strengths, weakness, opportunity and threats have been highlighted as we analyze the various financial sub segments.
Identify your company, its industry, and analyze the important segments (percentage of sales or subsidiaries) of your company compared to its industry and its overall business
The Coca-Cola Company (KO) is a multinational American Company that has its headquarters at Atlanta Georgia. The company has got its branches in more than 200 countries in the world and majority of its sales is in America, amounting to 40% of the total sales. The company operates in the non alcoholic beverage industry made up of the following companies as the main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi Inc. the company is the best performer in market capitalization compared to competitors with a capitalization of 169.49billion, higher .
Financials_FFH.TO_Hold_03_02_2015-3 (FInal Version)Alfredo Leon
The document provides an analysis of ACE Limited (TSX: FFH.TO) by the Babson College Fund Financials Sector Team. Key points include:
1) FFH.TO is rated "HOLD" with a price target of $699.97, representing potential upside of 6.7% from its current price of $656. The company has a unique investment philosophy and niche insurance products.
2) Strengths include improved underwriting results, uncorrelated market returns providing portfolio hedging, a diversified investment portfolio, and consistent book value growth. However, more analysis is needed due to current price uncertainty.
3) Risks include natural catastrophes, liquidity
- The document discusses Indiabulls Housing Finance Ltd, a large Indian mortgage financier. It provides an analysis of the company's strengths, governance issues, financial performance, and competitive positioning within the housing finance industry.
- While there are some perceived governance concerns around the parent company, the document argues these do not impact the mortgage business and that Indiabulls Housing Finance has a conservative balance sheet, strong profitability, and consistent financial performance.
- Based on the analysis, the document recommends buying Indiabulls Housing Finance, viewing it as undervalued relative to its quality and growth prospects within the Indian housing sector.
JPMorgan Chase reported record revenue and earnings for 2007. Key points:
- Total revenue was $71.4 billion, up 15% from 2006, and earnings were $15.4 billion.
- Most business lines achieved record or near-record earnings, but results were mixed with areas of weakness like mortgage trading.
- The Investment Bank had a record first half but struggled in the second half with difficult market conditions.
- Retail and card services grew customer accounts and sales, but earnings fell due to higher credit costs, especially in subprime mortgages.
- Commercial and treasury/securities services achieved record revenue and profits with strong loan and asset growth.
- Asset management
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1. Hindenburg Research July 31, 2017
Eros Earnings Review: An
Abundance of Red Flags
• Eros claims to be “well-capitalized” yet plans a shelf offering. The company also sold
shares of its key Indian operating subsidiary the very day of its earnings release
• The company reiterated a claim from early April that it is in advanced stages of
negotiations for a debt refinancing deal yet still has no deal in place
• The company is facing spiking financing costs which are +463.6% q/q; Short-term
debt stands at $180 million
• Past accounting questions appear to have intensified
• Eros announced a near doubling of its content library yet we find zero CY 2017 movies
“Recently Added” to its ErosNow website
Introduction
With this report we intend to update the market on our findings following Eros's latest annual results
released this past Friday. Much of the market seemed focused on Eros's top line and bottom line miss
and how the results tarnished the company's growth story. Despite those important takeaways, we
believe the full story is significantly worse.
Asset Sales and a Potential Shelf Offering Spell More Liquidity Issues
A key bullet point from the earnings release focused on Eros’s supposedly strong capitalization:
“Not including the $40 million set aside for the (revolving credit facility), Eros has over $112
million of cash on balance sheet, availability under existing lines of credit and access to capital
markets and the company remains well-capitalized and able to invest in future growth.”
Despite the self-proclaimed clean bill of health, the company’s actions and subsequent statements
seem to conflict with the notion that the company is adequately capitalized. In particular, the company
suggested they are seeking more capitalization options. In the very same release they stated:
“…we are in advanced stages of negotiations for a debt refinancing deal as well as expect to
file a shelf for a potential capital raise soon after this earnings.”
2. We can’t help but notice that in early April the company similarly stated they were “in advanced stages
of executing multiple long-term refinancing options” after a failed bond offering and a temporary
extension of their revolving credit facility. With debt maturities looming and without a deal in hand,
we believe the company is short on time and short on options.
Even more telling, the aforementioned equity and refinancing alternatives are being explored despite
the company’s rapid selling of shares in its key Indian operating subsidiary, Eros International Media
Limited (EIML). The most recent sale of EIML shares occurred the very same day of the annual
release, July 28th, suggesting a current and ongoing need for liquidity.
Based on Eros’s last share disposition filing with the BSE and recent sales reported to the NSE/BSE,
Eros owns approximately 45.32% of unencumbered shares in EIML and has pledged but retained
voting rights over another 16.20% of the company. This compares to the company’s last annual release
where they reported a 74.4% unencumbered stake in the operating subsidiary. It is unclear whether
these sales and share pledges are expected to continue.
If the above weren’t troubling enough, Eros’s “trade and other payables” increased by over 84%
to $120.1 million from $65.2 million in the preceding year, suggesting a significant near-term liquidity
burden that is due to the company’s suppliers.
In short, the company exhibits signs of an ever-tightening liquidity situation.
Spiking Financing Costs
The effects of this liquidity situation have also seemed to manifest in the form of increased financing
costs. From the company's most recent filing:
“For the three months ended March 31, 2017, net finance costs increased by 463.6% $6.2
million (sic), compared to $1.1 million in the three months ended March 31, 2017. In fiscal
2017, net finance costs increased by 115.0% to $17.2 million, compared to $8 million in fiscal
2016, mainly due to lower income from financing activities and increased borrowing costs.”
Part of the increase in financing costs can be explained by new debt, such as a new senior Term Loan
secured by a pledge of shares of EIML, carrying an interest rate of 13%-14.25%. In other cases we
see that pre-existing debt has been renegotiated at higher rates. For example, in this release we learned
for the first time that the interest rate on the revolving credit facility has moved significantly higher to
“LIBOR + 7.5% and Mandatory Cost” compared to a rate of “LIBOR + 1.90% - 2.90% and
Mandatory Cost” in the previously reported period. Such “tightening screws” are indicative of the
rising costs and stricter covenant terms that generally result from pushing out maturities to try and
buy a company more time to pay off its debts.
The company's $85 million revolver is due September 30th
and the company has $180 million in total
short-term borrowings due within a year. Eros stated that it has “set aside approximately $40 million
to pay (the RCF) down further” though it appears to have not yet actually paid it down. We intend to
carefully monitor for any new debt issuance or repayments at the company and its subsidiaries as the
debt scenario evolves over time.
3. Eros Television: A New Related Party Emerges
The latest filing discloses that Eros received a $6.4m short-term loan from Eros Television, which is
cited as a “related party”. We find it odd that Eros Television sits outside the Eros corporate structure.
Per Indian filings, Eros Television is a subsidiary of Eros Energy Singapore Pte Ltd:
Eros Energy Singapore has multiple subsidiaries that all appear to be related to the energy space,
except for Eros Television. Per Eros Television’s Directors Report dated November 2016 we see that
the entity generates 100% of its sales from the “Media and Entertainment Industry”, making it an
apparent anomaly in the Eros Energy corporate structure:
Furthering our suspicion, the entity appears to record little financial activity with the exception of large
cash transfers through a series of borrowings and advances, per the Eros Television audit report filed
November 2016:
4. In the same audit report we see a note showing that the advances were “advances given for film”:
If the above wasn’t odd enough, perhaps the greatest indication of potential irregularity is that Eros
derives a substantial portion of its revenue through television syndication. Per the annual release,
revenues from television syndication were a rare bright spot in the company’s results, representing a
year over year increase of 22.1% to $88.0 million from $72.1 million from the year prior.
Until recently it was not even clear to us that Eros insiders controlled a related-party television business
that sits outside the Eros corporate structure. We would be very interested to know the amount, if
any, of the television syndication revenue that Eros generates from dealings with related-party Eros
Television.
5. Questionable Revenue, Again
The company reported a severe drop in revenues in India, Europe, and North America. Despite these
across-the-board declines, the “Rest of the World” segment revenues increased substantially; an
increase of over 56% on a year over year basis:
The explanation provided by the company for the leap in RoW revenues is as follows:
“…mainly due to decreased theatrical revenues from the film mix offset by increased
catalogue revenues and accelerated catching up on sales held back in the second half
of fiscal 2016.”
For some context, the company was previously faced with questions about its historically large Days
Sales Outstanding (DSO) metric that, in part, stemmed from uncollected “high margin” catalogue
revenue. The company responded in FY 2016 by deciding to “forego a portion of their potential
catalogue revenues that have relatively longer payment cycles, in order to improve days’ sales
outstanding.”
As noted by research boutique GeoInvesting, that explanation appears to defy common sense. High
margin sales are the best kind of sales. Choosing to forego high margin business as a means of
temporarily improving a balance sheet metric seems to be nonsensical.
We find the language in this release on “accelerated catching up on sales held back” to be similarly
bizarre. It appears as if the company can simply turn on and off its “high margin” catalogue sales at
will. We find it curious that these sales seem to take place with such fluidity, and that they appear
heavily in the “Rest of the World” segment; the least-specific customer category consisting of largely
opaque jurisdictions.
Notably, the company also claims in the most recent March quarter to have generated over 60% of
its total revenue in “Rest of the world”.
Again, as noted by the folks at GeoInvesting, India has 1.25 billion citizens while there are only an
estimated 16 million total Indian ex-pats living abroad across all regions. While Bollywood
6. entertainment can certainly have appeal with anyone, one would think that such appeal may apply at
least somewhat proportionately across one or several other regions of the world such as Europe and
North America. Instead, we are led to believe that growth is shrinking in India, Europe, and North
America, while exploding elsewhere.
Questionable Receivables, Again
The company’s trade receivables balance increased to $226.8 million from $169.3 million from a year
ago, again due largely to “significantly higher catalogue sales”.
Using the updated trade receivables balance and the annual revenue number we calculate a DSO of
327 days. That metric is extremely high by any measure, but we believe the ex-India DSO to actually
be much worse.
Eros’s key Indian subsidiary (EIML) had a DSO of approximately 97 days in its last fully reported
fiscal year. Given that India accounts for a substantial proportion of the company’s total revenue and
has skewed the overall DSO downward, we can surmise that the DSO on revenue coming from
outside India is likely significantly higher than 327 days. The implication is that Rest of the World sales
seem to be particularly troublesome to collect on. We wonder why.
The company’s release added that they collected over $25 million of fiscal 2017 trade receivables post
balance sheet. While this was touted as an accomplishment, we view collection of only 11% of the
previously outstanding trade receivables in the roughly 4 month interim period as a reinforcement of
the company’s continued collection issues.
Eros’s Movie Library
In the annual release filed on Friday the company announced that “Eros’ library for digital film rights
stands at over 10,000 films.” According to conference call transcripts, CFO Prem Parameswaran
stated “By the end of the fiscal year we had added 5,000 digital titles to the roster of films available on
Eros Now.”
We find the new 10,000 metric to be somewhat confounding. On the ErosNow website there are zero
“Recently Added” movies for calendar year 2017 and only 22 movies for calendar year 2016 as of this
writing. Similarly, we checked every genre category and found zero movies for calendar year 2017 and
only 36 movies for calendar year 2016. We wonder, how old are the 5,000 additional digital titles and
where can they be found?
The apparent doubling of the company’s film library also occurred despite its “intangible asset—
content” line item only increasing by 13.8% from the previous year ($904.6m from $795.1m). Similarly,
the company’s cash flow line item for “Purchase of intangible film rights and content rights” dropped
17.8% on a y/y basis, to $173.5 million from 211.3 million.
We have a hard time understanding how the company nearly doubled its library while seemingly failing
to update its ErosNow offering with meaningful 2017 and 2016 content, failing to record a significant
7. increase in the value of content assets, and failing to spend a commensurate amount on the new library
titles. We seek clarification on specifically what was purchased.
What is the Story with the Movie Slate?
The MD&A section of the earnings release attempted to address various liquidity-related concerns by
discussing the financial strength of the company. One statement in that section suggested that a large
amount of money had been invested in the film slate. Specifically:
“Over $200 million is already invested in the ongoing slate.”
The implication seemed to be that the initial outlay could mitigate the company’s near-term cash
demands and give the company a chance to harvest its past investment.
Despite the stated $200 million past investment, the conference call transcript sent a potentially
conflicting message; the company acknowledged that the film slate would be “quieter” for the next 2
quarters and that they had not “thrown money to buy” an external slate. Rather, they claimed to be
developing movies in-house, which would take longer:
“The first two quarters will be quieter, because this is a self built up slate and not really
something that we have just thrown money to buy. So the first two quarters will be quieter
than the - it will be more back ended.”
On the same call, the company suggested that the slate was not fully funded and still ramping up:
“We are targeting pending $200 million to $225 million this year on new contents as we ramp
the slate and continue to bulk up our digital content offering.”
In other words, although a supposed $200 million had already invested in the ongoing slate, the
company expects to put another $200 million to $225 million in this year. Given all of the past and
planned investment, one might expect the outcome to be an aggressive roll-out of a large slate. Instead,
we are told the outcome is a quiet couple of quarters and promises of a full slate in the latter half of
the year and in the future.
ErosNow or ErosNever?
We are placing ErosNow at the bottom of this piece because we believe that placement corresponds
most accurately to its relevance at this time. ErosNow’s paying subscribers were announced as being
“tripled” over the course of the year; a sensational headline. When pressed for specifics on revenue
and cash flow on the conference call however, CFO Parameswaran noted that ErosNow had
generated only $14 million in revenue for the entire FY 2017. ErosNow therefore represents only
about 5.5% of reported FY 2017 revenue.
Despite the limited topline contribution, the company noted that “nearly 50%” of the digital film
rights are owned in perpetuity in an apparent effort to reinforce the long-term value of ErosNow and
the content library.
8. We seek clarification on exactly what proportion of the company’s digital rights are owned in
perpetuity. Historically, the proportion of rights held in perpetuity seemed materially lower than 50%.
From the prospectus of the company’s recently failed bond offering, the company states clearly:
“We have acquired most of our film content through fixed term contracts with third
parties, which may be subject to expiration or early termination. We own the rights to
the rest of our film content as co-producers or sole producer of those films.”
In other words, if Eros produced or co-produced the film; they owned the rights in perpetuity.
Otherwise, the rights may expire on a fixed term. The acquired content accounted for “most” of their
film content.
As of March 31 2016 the breakdown of expiration dates on the acquired content was as follows:
Digging deeper on those details; in aggregate only about 21% of those film rights were perpetual,
subject to copyright law limitations. Slightly over 44% of those rights expire “2020 or earlier”. In short,
a substantial proportion of Eros’s previously reported content expires sometime between now and
2020. Again, we seek clarification from the company on exactly how much of their content is owned
in perpetuity, and when the rights expire for non-perpetual content.
Conclusion
We have numerous accumulated questions about Eros, and frankly, we are past the point of having
confidence that they will be adequately answered. We believe Eros’s issues could be terminal for the
public listed company within 3-6 months, if not sooner. We believe the combination of (i) hard-to-
explain accounting questions (ii) short-term borrowings coming due (iii) spiking financing costs (iv)
sales of key assets (v) worsening top and bottom line metrics, and (vi) a tarnished story all continue to
make Eros a ticking time bomb for investors.
Disclosure: We are short shares of Eros
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