Southwest Airlines has a current stock price of $37.54 per share and the analyst assigns a target price of $34.53, representing an 8% downside. While Southwest once had a competitive advantage due to its low cost structure, this advantage has diminished as other carriers have improved their own cost efficiency. Employee relations have also become strained as the company negotiates new contracts with five unionized work groups. Despite recent fuel cost savings, the analyst believes Southwest's fading competitive position and labor uncertainties warrant a HOLD recommendation on the stock.
This document provides an analysis of Southwest Airlines (LUV) and makes the recommendation to HOLD the stock. It summarizes LUV's business model, competitive advantages, financial performance, and valuation. While LUV previously had a cost advantage due to its low-cost point-to-point structure, the analysis finds this advantage has diminished as other carriers have adopted similar models. It also notes concerns around LUV's strained employee relations and upcoming union negotiations which could increase costs. Based on the valuation methods used, the analysis sees 8% downside for LUV's stock price.
Miami University 2016 Harvard Financial Analyst Symposium Competition FinalistMichael T. Loffredo
This document provides an analysis of Expeditors International of Washington, Inc. It begins with an investment thesis that Expeditors faces challenges including inflated earnings estimates, decreasing global trade, margin compression, and a loss of management. It then provides an overview of the company and industry dynamics. Performance headwinds for Expeditors are discussed, including unsustainable margins from port strikes. A valuation analysis is presented using comparable companies and a discounted cash flow model, arriving at a target price of $40. The document concludes with a recommendation to sell Expeditors.
The document summarizes the CFA Institute Research Challenge hosted by CFA Societies in Texas, Louisiana, New Mexico and Oklahoma. The local challenge will take place at the University of Texas at Dallas. Students from participating universities will research and analyze Southwest Airlines and present their investment recommendation and rationale.
UT Dallas CFA IRC Report - 2016 LUV [104644]Trevor Deupree
The document summarizes the CFA Institute Research Challenge hosted by CFA Societies in Texas, Louisiana, New Mexico and Oklahoma. The local challenge will take place at the University of Texas at Dallas. Students from participating universities will research and analyze Southwest Airlines and present their investment recommendation and rationale.
Delta Airlines pitch document outlines the investment rationale for investing in Delta. It summarizes that Delta will benefit from increasing disposable income and air travel demand. Lower oil prices also reduce Delta's fuel costs. The document values Delta using comparable company analysis and a discounted cash flow valuation model. It sets a target price of $65.10 per share based on the models, representing a total implied return of 33.10% from the current stock price.
The kiangoi report-KQ An Interpretation of Financial Results 13/14 Chweya Kiangoi
The Kiangoi Report aims to provide the lay investor with the necessary information needed when making investment decisions. Visit our blog http://thekiangoireport.blogspot.com
This document provides an analytical note on Kenya Airways Ltd. It begins with an investment summary that recommends a "SPECULATE" rating for the stock based on price volatility and liquidity. Various financial analyses are then summarized, showing declining returns and signs the company may be facing bankruptcy. Key risks like competition, fuel costs, and weak codeshare partnerships are also discussed. Strategies are proposed for Kenya Airways to reduce costs, improve revenue management, and leverage its brand as the "Pride of Africa".
Miami University 2016 Cleveland Research Company Stock Pitch Competition WinnerMichael T. Loffredo
Orbital ATK is an aerospace and defense company that provides products and services to government and commercial customers. The presentation recommends Orbital ATK as a buy with a 12-month price target of $110, representing 27.1% upside. Key points include Orbital ATK benefiting from international military spending increases, growth in commercial aircraft deliveries, and opportunities in satellite servicing. Risks include competition from larger players and potential issues executing innovative contracts.
This document provides an analysis of Southwest Airlines (LUV) and makes the recommendation to HOLD the stock. It summarizes LUV's business model, competitive advantages, financial performance, and valuation. While LUV previously had a cost advantage due to its low-cost point-to-point structure, the analysis finds this advantage has diminished as other carriers have adopted similar models. It also notes concerns around LUV's strained employee relations and upcoming union negotiations which could increase costs. Based on the valuation methods used, the analysis sees 8% downside for LUV's stock price.
Miami University 2016 Harvard Financial Analyst Symposium Competition FinalistMichael T. Loffredo
This document provides an analysis of Expeditors International of Washington, Inc. It begins with an investment thesis that Expeditors faces challenges including inflated earnings estimates, decreasing global trade, margin compression, and a loss of management. It then provides an overview of the company and industry dynamics. Performance headwinds for Expeditors are discussed, including unsustainable margins from port strikes. A valuation analysis is presented using comparable companies and a discounted cash flow model, arriving at a target price of $40. The document concludes with a recommendation to sell Expeditors.
The document summarizes the CFA Institute Research Challenge hosted by CFA Societies in Texas, Louisiana, New Mexico and Oklahoma. The local challenge will take place at the University of Texas at Dallas. Students from participating universities will research and analyze Southwest Airlines and present their investment recommendation and rationale.
UT Dallas CFA IRC Report - 2016 LUV [104644]Trevor Deupree
The document summarizes the CFA Institute Research Challenge hosted by CFA Societies in Texas, Louisiana, New Mexico and Oklahoma. The local challenge will take place at the University of Texas at Dallas. Students from participating universities will research and analyze Southwest Airlines and present their investment recommendation and rationale.
Delta Airlines pitch document outlines the investment rationale for investing in Delta. It summarizes that Delta will benefit from increasing disposable income and air travel demand. Lower oil prices also reduce Delta's fuel costs. The document values Delta using comparable company analysis and a discounted cash flow valuation model. It sets a target price of $65.10 per share based on the models, representing a total implied return of 33.10% from the current stock price.
The kiangoi report-KQ An Interpretation of Financial Results 13/14 Chweya Kiangoi
The Kiangoi Report aims to provide the lay investor with the necessary information needed when making investment decisions. Visit our blog http://thekiangoireport.blogspot.com
This document provides an analytical note on Kenya Airways Ltd. It begins with an investment summary that recommends a "SPECULATE" rating for the stock based on price volatility and liquidity. Various financial analyses are then summarized, showing declining returns and signs the company may be facing bankruptcy. Key risks like competition, fuel costs, and weak codeshare partnerships are also discussed. Strategies are proposed for Kenya Airways to reduce costs, improve revenue management, and leverage its brand as the "Pride of Africa".
Miami University 2016 Cleveland Research Company Stock Pitch Competition WinnerMichael T. Loffredo
Orbital ATK is an aerospace and defense company that provides products and services to government and commercial customers. The presentation recommends Orbital ATK as a buy with a 12-month price target of $110, representing 27.1% upside. Key points include Orbital ATK benefiting from international military spending increases, growth in commercial aircraft deliveries, and opportunities in satellite servicing. Risks include competition from larger players and potential issues executing innovative contracts.
IATA Global Aviation Human Capital Summit, Singapore, November 2011Dr. Guido Gianasso
The document summarizes the proceedings of the Global Aviation Human Capital Summit 2011. It discusses the challenges and opportunities for human capital in the aviation industry, including how to cut costs while improving customer experience, attract talent when employee branding has weakened, develop future leaders, and retain employees. It also provides an economic outlook for the global airline industry, noting pressures from high fuel costs and slowing economic growth. Finally, it acknowledges a survey conducted to better understand the views of attendees on human capital issues in aviation.
2015 - Cleveland Research Company Stock Pitch Competition Runner UpMichael T. Loffredo
Cytec Industries is positioned to benefit from growth in the aerospace, automotive, and mining industries. It has substantial contracts with Boeing and Airbus to supply lightweight composite materials for commercial aircraft. Legislation requiring automakers to improve fuel efficiency will increase demand for composites. In mining, decreasing ore grades are driving increased production and use of Cytec's separation chemicals. The analyst recommends Cytec as a buy with a 12-month price target of $70.50, representing 30.51% upside.
Human Capital Opportunities and Challenges in AviationDr. Guido Gianasso
The document summarizes the proceedings of the Global Aviation Human Capital Summit 2011. It discusses the challenges and opportunities for human capital in the aviation industry. Specifically, it notes that 500 HR leaders from airlines, airports, and other aviation organizations were invited to the summit to discuss issues like attracting and retaining talent, leadership development, and managing labor costs and unions. The summit provided a forum for participants to network, share best practices, and identify ways that IATA can better support the human capital needs of the aviation industry.
Mahindra &Mahindra Q1FY15 profits better than estimates - Hold - SPA SecuritiesIndiaNotes.com
M&M reported Q1FY15 revenue & profit of INR 103 bn & INR 9 bn, which were better than our estimates because of higher realization for both the Automotive & Farm Equipment Segment (FES). Margins declined 47 bps YoY to 12.4% and EBITDA stood at INR 13 bn.
This document discusses venture capital funds, how they operate, and the types of companies they invest in. It provides statistics on venture capital investments in Europe in 2013, including the top sectors invested in, types of investors in venture capital funds, and comparisons of venture capital investments as a percentage of GDP across different European countries. Greece is noted as having a lower percentage of venture capital investments relative to GDP compared to other European countries. The document also contains information on company sizes that receive venture capital investments.
This document provides an overview of a company presentation for CFA Institute Research Challenge. Key points include:
- The presentation was made by a team from Canisius College in Buffalo, NY for the Americas Competition in Atlanta, GA.
- An analysis is provided of Sovran Self Storage (SSS), the 4th largest self-storage company in the US, including its industry, competitive positioning, financials, valuation, and risks.
- Valuation methods employed include DCF analysis using Monte Carlo simulation, relative multiples comparison, and a price target is determined to be $96 per share, indicating a small upside from the current price.
This document provides an overview of a company presentation for a self-storage REIT called SSS for the CFA Institute Research Challenge. The presentation includes sections on the company overview, industry analysis, financial analysis, valuation, and risks. Key points include that SSS is the 4th largest self-storage company in the US, derives 92% of revenue from rental income, and has over 500 properties. The valuation ranges from $96-98.81 based on DCF, EV/EBITDA, and P/FFO multiples. Risks include concentration risk, loss of credit rating, and rising interest rates. The conclusion is to hold SSS based on its experienced management and tailwinds, but also concerns around
This document provides an overview and analysis of Skipper's Sporting Goods for potential transaction options. It summarizes the company's position in the sporting goods industry, growth opportunities, and financial projections. Valuation methods, including leveraged buyout, IPO, and precedent transactions, imply an enterprise value range of $1,400-$1,600 million. The recommendation will evaluate strategic acquisition, sponsor buyout, IPO, and maintaining the status quo based on maximizing shareholder value and management goals.
A presentation I made to the Automotive News World Congress in 2004. A lot of it is still true today, but it is most interesting to me to compare the predictions with what actually happened
Omnicom Should Be On Value Investor & Activist Investors' Radar ScreenJeff Lawrence
Like many value stocks, Omnicom is materially undervalued relative to its intrinsic value. However, it is also unique because its stable ROIC / EVA has not, historically, been reflected in its relative stock price nor its equity beta.
Resolving these inconsistencies may require a material reduction in its excess cash holdings and/or additional corporate governance reform. It is not inconceivable that an activist investor will be drawn to the company, despite its status as a large cap stock.
This financial analysis report summarizes Gree Electric Appliances' financial performance from 2009-2013. It analyzes Gree's short-term liquidity, financial leverage, operational capacity, profitability, and development capacity compared to its peers. While Gree maintains high debt ratios, its strong relationships with suppliers and non-interest bearing debts allow it to effectively control financial risk. The report also uses DuPont analysis to evaluate Gree's profitability, asset utilization, and financial structure.
Booz Allen Hamilton - 2016 Cleveland Research Company Stock Pitch CompetitionMatthew R. Thomas
Booz Allen Hamilton is a management consulting firm focused on government contracts, especially in defense and cybersecurity. The analysts recommend Booz Allen as a buy with a 12-month price target of $35.10, representing 25.99% upside. Key points include Booz Allen's focus on growing areas like cybersecurity, anticipated margin growth from more fixed-price contracts, and potential in commercial markets. Valuation analyses show the stock is currently undervalued compared to peers on a price/earnings and enterprise value/EBITDA basis.
Mobileye is a technological leader in autonomous driving poised to benefit from regulations requiring automatic emergency braking by 2022. It has substantial contracts with automakers like GM and technology like EyeQ that provides effective vision-based driver assistance. The analysts recommend Mobileye as a buy with a $60 price target, a 50% upside.
Infomedia (IFM) - equity research initiation reportGeorge Gabriel
Initiation report on Infomedia (IFM) which I published. Overview of key value drivers and analysis of the investment opportunity. Still relevant today. Published for institutional investor market.
The document provides financial information about Zip Zap Zoom Car Company over several years. It discusses the company's need to invest in upgrading technology and facilities to compete with increasing competition. It presents two views on determining the company's additional debt capacity. Mr. Shortsighted assumes a maximum 10% reduction in sales and 6% reduction in prices during a recession, and calculates the company can service Rs. 100 crore of additional debt. Mr. Longsighted argues a more probabilistic analysis of cash flows is needed that accounts for dividend payments and continued R&D/marketing spending. His analysis finds the company can service an additional Rs. 35 crore of debt while maintaining a 10% dividend with 95% certainty of adequate
Tofaş is a Turkish automaker founded in 1968. It produces Fiat, Alfa Romeo, Lancia, Maserati, Ferrari, and Jeep vehicles. The document analyzes Tofaş' financial statements from 2012-2014 through horizontal analysis, vertical analysis, and key financial ratios to evaluate the company's performance and investment potential. The analysis found that Tofaş demonstrates financial stability, low investment risk, and ability to meet obligations, leading to a recommendation to invest in the company.
This document provides a summary of continuous evaluation component (CEC) project reports submitted by MBA students. It includes analyses of topics like economic-industry-company analysis, leverage analysis, e-commerce and plastic money, entrepreneur qualities, consumer protection act, and merger of Vodafone and Hutch. Tables provide financial data for a company from 2012-2016, including revenue, expenses, assets, liabilities, and stockholder equity. Formulas are given for calculating operating leverage, financial leverage, and combined leverage from the financial information.
This document is a project report submitted by students from the MBA stream at Shree H.N.Shukla Collage of Management & Studies. It contains analysis of various topics related to different subjects like SAPM, SFM, MFS, NEIM, LAB and SM. The report includes E-I-C analysis, leverage analysis, e-commerce and plastic money, entrepreneur qualities, consumer protection act and merger of Vodafone and Hutch. Tables with financial data from 2012-2016 and definitions of concepts like operating leverage, financial leverage and combined leverage are also presented.
Private Equity Activity In Commercial Aviation - 2017 OverviewAndrei Grskovic
This document discusses private equity activity in the commercial aviation industry in 2017. It finds that while M&A deal volume has remained relatively constant, transactions are getting larger on average. Most private equity investment has been concentrated in the United States and in consolidating fragmented industry segments like aerospace and engine components. Leading private equity firms have executed roll-up strategies, and successful exits have often been to strategic corporate buyers. However, with lower new aircraft orders in recent years, private equity multiples may start to moderate from historic highs as the order super cycle ends.
Stantec is a design consulting firm with over 15,000 employees in over 250 locations worldwide. It provides professional consulting services in planning, engineering, infrastructure and energy/resources. The document analyzes Stantec's business operations, industry and competitive landscape, financial performance, valuation using a discounted cash flow model, risks, and recommends a "hold" position with a 12-month target price of $34.1, an 8.8% upside from the current price. Key risks include operational, market, integration and commodity risks.
The document summarizes an investment analysis report on Southwest Airlines (LUV) conducted by students for the CFA Institute Research Challenge. The report initiates coverage of LUV with a Hold recommendation based on a target price implying 8% downside. Key points include LUV's past success due to low-cost leadership, conservative operating strategy, but diminishing cost advantages as competitors adopt similar strategies, and labor issues potentially impacting margins.
Spirit Airlines operates an ultra-low cost carrier business model with very low base fares and high additional fees. While this model has led to high customer dissatisfaction ratings, it has driven strong financial performance for Spirit. The analysis shows that between 2011-2015, Spirit grew passenger sales significantly faster than Southwest Airlines and achieved higher operating profit margins and returns on assets. However, Spirit's heavy investments in expanding its fleet have increased debt levels and may pressure liquidity in the future. Overall, the analyst concludes that Spirit's market niche, profitability, and current liquidity are positives, but debt and leasing obligations pose uncertainty.
IATA Global Aviation Human Capital Summit, Singapore, November 2011Dr. Guido Gianasso
The document summarizes the proceedings of the Global Aviation Human Capital Summit 2011. It discusses the challenges and opportunities for human capital in the aviation industry, including how to cut costs while improving customer experience, attract talent when employee branding has weakened, develop future leaders, and retain employees. It also provides an economic outlook for the global airline industry, noting pressures from high fuel costs and slowing economic growth. Finally, it acknowledges a survey conducted to better understand the views of attendees on human capital issues in aviation.
2015 - Cleveland Research Company Stock Pitch Competition Runner UpMichael T. Loffredo
Cytec Industries is positioned to benefit from growth in the aerospace, automotive, and mining industries. It has substantial contracts with Boeing and Airbus to supply lightweight composite materials for commercial aircraft. Legislation requiring automakers to improve fuel efficiency will increase demand for composites. In mining, decreasing ore grades are driving increased production and use of Cytec's separation chemicals. The analyst recommends Cytec as a buy with a 12-month price target of $70.50, representing 30.51% upside.
Human Capital Opportunities and Challenges in AviationDr. Guido Gianasso
The document summarizes the proceedings of the Global Aviation Human Capital Summit 2011. It discusses the challenges and opportunities for human capital in the aviation industry. Specifically, it notes that 500 HR leaders from airlines, airports, and other aviation organizations were invited to the summit to discuss issues like attracting and retaining talent, leadership development, and managing labor costs and unions. The summit provided a forum for participants to network, share best practices, and identify ways that IATA can better support the human capital needs of the aviation industry.
Mahindra &Mahindra Q1FY15 profits better than estimates - Hold - SPA SecuritiesIndiaNotes.com
M&M reported Q1FY15 revenue & profit of INR 103 bn & INR 9 bn, which were better than our estimates because of higher realization for both the Automotive & Farm Equipment Segment (FES). Margins declined 47 bps YoY to 12.4% and EBITDA stood at INR 13 bn.
This document discusses venture capital funds, how they operate, and the types of companies they invest in. It provides statistics on venture capital investments in Europe in 2013, including the top sectors invested in, types of investors in venture capital funds, and comparisons of venture capital investments as a percentage of GDP across different European countries. Greece is noted as having a lower percentage of venture capital investments relative to GDP compared to other European countries. The document also contains information on company sizes that receive venture capital investments.
This document provides an overview of a company presentation for CFA Institute Research Challenge. Key points include:
- The presentation was made by a team from Canisius College in Buffalo, NY for the Americas Competition in Atlanta, GA.
- An analysis is provided of Sovran Self Storage (SSS), the 4th largest self-storage company in the US, including its industry, competitive positioning, financials, valuation, and risks.
- Valuation methods employed include DCF analysis using Monte Carlo simulation, relative multiples comparison, and a price target is determined to be $96 per share, indicating a small upside from the current price.
This document provides an overview of a company presentation for a self-storage REIT called SSS for the CFA Institute Research Challenge. The presentation includes sections on the company overview, industry analysis, financial analysis, valuation, and risks. Key points include that SSS is the 4th largest self-storage company in the US, derives 92% of revenue from rental income, and has over 500 properties. The valuation ranges from $96-98.81 based on DCF, EV/EBITDA, and P/FFO multiples. Risks include concentration risk, loss of credit rating, and rising interest rates. The conclusion is to hold SSS based on its experienced management and tailwinds, but also concerns around
This document provides an overview and analysis of Skipper's Sporting Goods for potential transaction options. It summarizes the company's position in the sporting goods industry, growth opportunities, and financial projections. Valuation methods, including leveraged buyout, IPO, and precedent transactions, imply an enterprise value range of $1,400-$1,600 million. The recommendation will evaluate strategic acquisition, sponsor buyout, IPO, and maintaining the status quo based on maximizing shareholder value and management goals.
A presentation I made to the Automotive News World Congress in 2004. A lot of it is still true today, but it is most interesting to me to compare the predictions with what actually happened
Omnicom Should Be On Value Investor & Activist Investors' Radar ScreenJeff Lawrence
Like many value stocks, Omnicom is materially undervalued relative to its intrinsic value. However, it is also unique because its stable ROIC / EVA has not, historically, been reflected in its relative stock price nor its equity beta.
Resolving these inconsistencies may require a material reduction in its excess cash holdings and/or additional corporate governance reform. It is not inconceivable that an activist investor will be drawn to the company, despite its status as a large cap stock.
This financial analysis report summarizes Gree Electric Appliances' financial performance from 2009-2013. It analyzes Gree's short-term liquidity, financial leverage, operational capacity, profitability, and development capacity compared to its peers. While Gree maintains high debt ratios, its strong relationships with suppliers and non-interest bearing debts allow it to effectively control financial risk. The report also uses DuPont analysis to evaluate Gree's profitability, asset utilization, and financial structure.
Booz Allen Hamilton - 2016 Cleveland Research Company Stock Pitch CompetitionMatthew R. Thomas
Booz Allen Hamilton is a management consulting firm focused on government contracts, especially in defense and cybersecurity. The analysts recommend Booz Allen as a buy with a 12-month price target of $35.10, representing 25.99% upside. Key points include Booz Allen's focus on growing areas like cybersecurity, anticipated margin growth from more fixed-price contracts, and potential in commercial markets. Valuation analyses show the stock is currently undervalued compared to peers on a price/earnings and enterprise value/EBITDA basis.
Mobileye is a technological leader in autonomous driving poised to benefit from regulations requiring automatic emergency braking by 2022. It has substantial contracts with automakers like GM and technology like EyeQ that provides effective vision-based driver assistance. The analysts recommend Mobileye as a buy with a $60 price target, a 50% upside.
Infomedia (IFM) - equity research initiation reportGeorge Gabriel
Initiation report on Infomedia (IFM) which I published. Overview of key value drivers and analysis of the investment opportunity. Still relevant today. Published for institutional investor market.
The document provides financial information about Zip Zap Zoom Car Company over several years. It discusses the company's need to invest in upgrading technology and facilities to compete with increasing competition. It presents two views on determining the company's additional debt capacity. Mr. Shortsighted assumes a maximum 10% reduction in sales and 6% reduction in prices during a recession, and calculates the company can service Rs. 100 crore of additional debt. Mr. Longsighted argues a more probabilistic analysis of cash flows is needed that accounts for dividend payments and continued R&D/marketing spending. His analysis finds the company can service an additional Rs. 35 crore of debt while maintaining a 10% dividend with 95% certainty of adequate
Tofaş is a Turkish automaker founded in 1968. It produces Fiat, Alfa Romeo, Lancia, Maserati, Ferrari, and Jeep vehicles. The document analyzes Tofaş' financial statements from 2012-2014 through horizontal analysis, vertical analysis, and key financial ratios to evaluate the company's performance and investment potential. The analysis found that Tofaş demonstrates financial stability, low investment risk, and ability to meet obligations, leading to a recommendation to invest in the company.
This document provides a summary of continuous evaluation component (CEC) project reports submitted by MBA students. It includes analyses of topics like economic-industry-company analysis, leverage analysis, e-commerce and plastic money, entrepreneur qualities, consumer protection act, and merger of Vodafone and Hutch. Tables provide financial data for a company from 2012-2016, including revenue, expenses, assets, liabilities, and stockholder equity. Formulas are given for calculating operating leverage, financial leverage, and combined leverage from the financial information.
This document is a project report submitted by students from the MBA stream at Shree H.N.Shukla Collage of Management & Studies. It contains analysis of various topics related to different subjects like SAPM, SFM, MFS, NEIM, LAB and SM. The report includes E-I-C analysis, leverage analysis, e-commerce and plastic money, entrepreneur qualities, consumer protection act and merger of Vodafone and Hutch. Tables with financial data from 2012-2016 and definitions of concepts like operating leverage, financial leverage and combined leverage are also presented.
Private Equity Activity In Commercial Aviation - 2017 OverviewAndrei Grskovic
This document discusses private equity activity in the commercial aviation industry in 2017. It finds that while M&A deal volume has remained relatively constant, transactions are getting larger on average. Most private equity investment has been concentrated in the United States and in consolidating fragmented industry segments like aerospace and engine components. Leading private equity firms have executed roll-up strategies, and successful exits have often been to strategic corporate buyers. However, with lower new aircraft orders in recent years, private equity multiples may start to moderate from historic highs as the order super cycle ends.
Stantec is a design consulting firm with over 15,000 employees in over 250 locations worldwide. It provides professional consulting services in planning, engineering, infrastructure and energy/resources. The document analyzes Stantec's business operations, industry and competitive landscape, financial performance, valuation using a discounted cash flow model, risks, and recommends a "hold" position with a 12-month target price of $34.1, an 8.8% upside from the current price. Key risks include operational, market, integration and commodity risks.
The document summarizes an investment analysis report on Southwest Airlines (LUV) conducted by students for the CFA Institute Research Challenge. The report initiates coverage of LUV with a Hold recommendation based on a target price implying 8% downside. Key points include LUV's past success due to low-cost leadership, conservative operating strategy, but diminishing cost advantages as competitors adopt similar strategies, and labor issues potentially impacting margins.
Spirit Airlines operates an ultra-low cost carrier business model with very low base fares and high additional fees. While this model has led to high customer dissatisfaction ratings, it has driven strong financial performance for Spirit. The analysis shows that between 2011-2015, Spirit grew passenger sales significantly faster than Southwest Airlines and achieved higher operating profit margins and returns on assets. However, Spirit's heavy investments in expanding its fleet have increased debt levels and may pressure liquidity in the future. Overall, the analyst concludes that Spirit's market niche, profitability, and current liquidity are positives, but debt and leasing obligations pose uncertainty.
This document analyzes American Airlines Group (AAL) and recommends it as a long investment. It provides an overview of AAL, the airline industry, AAL's competitive position and financials. Key points are that AAL has the largest US network, experienced management from the US Airways merger, and improving profitability margins. While the market remains skeptical due to AAL's bankruptcy, the analysts believe AAL is executing its turnaround successfully and that its profitability and valuation make it underappreciated relative to peers.
The document provides an analysis of Artisan Partners (APAM) recommending a SELL with a price target of $29. The analysis cites three key business drivers negatively impacting APAM: 1) Limited growth opportunities due to passive investing trends and closed funds, 2) Declining fund performance impacting flows, and 3) High fees that require consistent outperformance. A DCF valuation estimates APAM's intrinsic value at $33, while relative valuations estimate $23-23.40. Weighting the methods gives a target price of $29, implying the stock is overvalued.
Credit Suisse, 19th Annual Summit Energy Conference
February 13, 2014
Rob Saltiel
President and CEO
Atwood Oceanics, Inc.
Atwood Oceanics, Inc. is a global offshore drilling contractor engaged in the drilling and completion of exploratory and developmental oil and gas wells. The company currently owns 13 mobile offshore drilling units and is constructing three ultra-deepwater drillships. The company was founded in 1968 and is headquartered in Houston, Texas. Atwood Oceanics, Inc. common stock is traded on the New York Stock Exchange under the symbol "ATW."
Driving growth and differential performance among Class I railroadsDeloitte United States
Building a precision-scheduled railroad generated substantial benefit for Class I railroads and their shareholders when compared to their prior performance. However, with nearly all railroads pursuing the same strategy, we see differential performance among the Class I railroads driven primarily by changes in industrial production rather than strategic choices by management and Boards of Directors. Breaking away from the narrow range of industry peer performance will likely require more deliberate choices about the scope of operations and services that offer good prospects for returns on capital. Railroad executives should shift attention from operations to the configuration of commercial functions to help realize distinct competitive advantages and improved shareholder returns.
- Phillips 66 Partners LP owns, operates, develops and acquires primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines and terminals and other midstream assets.
- PSXP has a balanced portfolio of assets with long-term, fee-based contracts providing stable cash flows. Recent acquisitions and organic growth projects will further expand the portfolio.
- PSXP is targeting 30% annual distribution growth through 2018 while maintaining investment grade credit ratings and annual distribution coverage of at least 1.1x.
We recommend Cintas Corporation as a HOLD with a 12-month price target of $81, representing an upside of 0.77% from the current price of $81.32. Key factors leading to a neutral outlook include limited opportunities for organic growth, continued emphasis on cross-selling and acquisitions to improve margins, and an aggressive capital return plan including share buybacks.
The document examines how the top performing upstream oil and gas companies are able to deliver higher returns on capital employed compared to their peers. It analyzes 74 of the largest global oil and gas companies based on data from 2006-2012. The top performers significantly outperformed the industry average, achieving a 38% return on capital employed versus 21% for the industry. The key differentiators of the top companies were selectivity in capital investment rather than velocity of spending, higher capital productivity through generating more revenue per dollar invested, and a strong focus on operating excellence through lower production costs. While the top companies demonstrated a positive relationship between returns and pursuit of growth, capital productivity was declining across the industry as exploration moved to more challenging areas.
Milco is analyzing opportunities for international growth. Financial analysis shows increasing profitability. Competitively, Milco has a strong position in military flight simulators and MRO presents an opportunity as a competitor exits. Recommendations include expanding MRO services in Germany, Austria, and expanding military flight simulators in Saudi Arabia and Turkey to capitalize on growing markets.
May 2018 Investor Conference Presentation 2018corporationlkq
The document is May 2018 investor conference presentation from LKQ Corporation. It provides an overview of LKQ's operations, including its strategic focus areas of growing, expanding, rationalizing, and adapting its business. It discusses LKQ's historical financial performance, with consolidated revenue reaching $9.7 billion in 2017. It also reviews LKQ's operations in North America and Europe, highlighting the large size and fragmentation of both markets that provide opportunities for growth.
- Greenback Securities recommends buying Hertz Global Holdings stock with a target price of $30.73 per share, representing a 23% total return over 12 months.
- Key drivers for the recommendation include recovering economic conditions in the US fostering the airline industry, synergies from acquisitions, operating efficiencies, and the promising spin off of equipment rental business HERC.
- The presentation provides an overview of Hertz, the car rental industry, Hertz's financial performance and outlook, valuation analysis, and investment risks.
Curtiss-Wright Corporation provides highly engineered products and services to aerospace, defense, and industrial markets. In Q2 2015, EPS was $0.83 ahead of expectations despite a 4% decrease in net sales and 9% decrease in operating income due to costs in the power segment. For 2015, the company expects 1-3% sales growth, operating margin expansion to 13.3-13.4%, and 10-13% growth in diluted EPS. Curtiss-Wright aims to achieve top quartile performance through organic growth, margin expansion initiatives, and balanced capital allocation.
William Blair 2017 Growth Stock Conferencecorporationlkq
The document provides an overview of William Blair's 2017 Growth Stock Conference on June 13, 2017. It includes forward-looking statements and discusses LKQ Corporation's mission to be the leading global distributor of vehicle parts and accessories. The document outlines LKQ's evolution through acquisitions, acquisition philosophies, operating segments, and provides an overview of the large and fragmented North American and European vehicle parts markets that LKQ serves.
Over the past few years, the Asia Pacific aerospace industry has been accelerating forward. Aircraft OEM production backlog is at historical record levels and demonstrates strong industry confidence looking forward. The Asian fleet will see robust growth over the next decade and the second fastest growth globally. Learn more on this future growth in this ICF presentation, originally shared during a US Commercial Service webinar.
For more information, visit: http://www.icfi.com/markets/aviation/aerospace
Financial Analysis: Kraft Foods Inc. (KFT)Yaw Ofosu
This document provides an analysis of Kraft Foods Inc. (KFT) including its background, financial ratios, projections, financing, capital structure, dividend policy, stock value, analyst opinions, and recommendation. Kraft is the largest food company in the US and world's 2nd largest, with $49.21B in revenue and operations in over 75 countries. The analysis finds KFT has a low risk capital structure and cost of capital of 6.15%. While the current stock price is $31.16, the dividend discount and total corporate value models value the stock at $83.95 and $36.99 respectively. Based on Kraft's strengths and growth opportunities, the recommendation is to buy the stock.
This document provides an overview and analysis of financial ratios and working capital needs for customer analysis. It includes an agenda, background on financial ratio analysis, a customer analysis model, discussion of key financial ratios including profitability, debt service coverage, liquidity, solvability, productivity, and working capital needs. It also provides examples of balance sheets, profit/loss statements, and a cash flow adjustment model. Finally, it presents a case study comparing the balance sheets of companies PT A and PT B.
2. $0
$10
$20
$30
$40
$50
$60
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Close Price Current Price Target Price
Executive Summary
2
Market Profile (as of 02/04/2016)
Closing Price: $37.54
52-Week High-Low: $31.36 / $51.34
Diluted Shares Out. : 679.55 M
Average Volume (6M): 8.44 M
Market Cap: $ 22.78 B
LTMDividend Yield: 0.76%
Short Interest (%) Float: 3.77%
Beta: 1.11
EV/EBITDAR*: 5.0 x
P/E*: 12.7 x
Institutional Holders: 82.94%
Insider Holdings: 0.28%
NYSE: LUV Recommendation: HOLD
Industry: Airlines Current Price: $37.54
Sector: Transportation Target Price: $34.53 (8% Downside)
LUV $34.53
LUV $37.54
Investment Themes:
Low Cost, No Frill Approach
Conservative Operating Philosophy
Declining Competitive Advantage
Strained Employee Relations
*Multiples adjusted for Operating Leases
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
3. 3
Employee Relations
Cost Structure
A B
C D
E F FC
E
D
B G
A
Low Cost
Structure
Point to
Point
Each route serves
a single city-pair
Higher aircraft
utilization and
turnaround times
Hub and
Spoke
Hub connections
significantly
increase CASM
Routes are
interdependent
for connecting
passengers
Vs.
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
Historical Competitive Advantage
The Southwest Effect
Traffic Demand In New Markets
Average Fares in New Markets
Low Fares Brand Image
4. 4
Executive Council * denotes company tenure
Gary C. Kelly
Chairman of the
Board, CEO
Tammy Romo
EVP/Chief
Financial Officer
Robert E. Jordan
EVP/Chief
Commercial
Officer
Michael G. Van deVen
EVP/Chief
Operating Officer
Jeff Lamb
EVP of Corporate
Services
Mark R. Shaw
SVP Gen. Counsel,
Corporate Secretary
Thomas M. Nealon
EVP Strategy &
Innovation
29
12
0
24
28
11
15
*
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
“Your people come first, and if you treat them right, they’ll treat the customers right.”
- Herb Kelleher, Founder of Southwest Airlines
5. Major Markets, Pre-AirTran Acquisition (2011)
5
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
6. Major Markets,After AirTran Acquisition (2014)
6
ATLANTA
PARADISE ISLAND
BERMUDA
CHARLOTTE
MEMPHIS
BRANSON
WICHITA
GRAND
RAPIDS
FLINT
RICHMOND
ROCHESTER
PENSACOLA
PORTLAND
CABO SAN LUCAS
MEXICO CITY
CANCÚN
MONTEGO BAY
ARUBA
PUNTA CANA
SAN JUAN
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
7. Major Markets,After Wright Amendment Repeal (2014)
7
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
11. Evolving Structures
11
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2001 2003 2005 2007 2009 2011 2013 2015
Operating Cost Structure
Wages Fuel Other Costs
The industry dynamics have changed substantially since the Deregulation Act
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
0%
5%
10%
15%
20%
25%
30%
35%
40%
1998 2000 2002 2004 2006 2008 2010 2012 2014
Streamlined Labor Costs % of Revenue
Labor Other Costs
12. Current Dynamics
12
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
$0
$20
$40
$60
$80
$100
$120
-1.0 M
-0.5 M
0.0 M
0.5 M
1.0 M
1.5 M
2.0 M
2.5 M
3.0 M
Supply-Demand Spread (mbpd) WTI Spot Price
Supply Imbalance vs Crude Oil
Fuel tailwinds have created ROIC levels above WACC
44% Jet fuel price per gallon
Oil Supply Surplus
Global energy demand
Alleviate debt obligations
Increase shareholder returns
13. Macroeconomic Drivers
13
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
1986 1991 1996 2001 2006 2011 2016
0
10
20
30
40
50
60
70
Contracting PMI levels
PMI Index Real GDP YoY
0 B
10,000 B
20,000 B
30,000 B
40,000 B
50,000 B
60,000 B
70,000 B
80,000 B
90,000 B
0 B 500 B 1,000 B 1,500 B 2,000 B 2,500 B
Corporate Earnings vs AirlineTraffic
Correlation = 84%
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
PMI Non-PMI Corp. Earnings Traffic
*78% *84%*80%
* Denotes correlation
14. Industry Drivers
14
-10%
-5%
0%
5%
10%
15%
20%
2010 2011 2012 2013 2014 2015
Yield
Legacy LCC's ULCC's
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
03/06 10/07 05/09 12/10 07/12 02/14 09/15
Passenger Revenue per Available Seat Mile
PRASM Fuel Cost pASM Labor Cost pASM
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
Short-term industry yields are expected to stabilize
Yield = Passenger Revenue/Revenue Passenger Mile
18. Cost – Efficiency Analysis
18
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
0%
2%
4%
6%
8%
10%
12%
14%
2011 2012 2013 2014 2015
Late Arrival Ratio
Southwest* Industry*
∆ = 34%
-60% -40% -20% 0% 20% 40%
Legacy
LCC's
ULCC's
Industry
Industry's CASM Ex-fuel compared to LUV
09/2015 12/2009
∆ = -19%
∆ = -15%
∆ = -8%
∆ = -11%
“Not only has the world changed, but our relative position within the industry on costs has changed.”
- Gary Kelly, CEO of Southwest Airlines
19. 19
5 Union Work Groups
Current Negotiations:
Employees
Representing
55.8%
43%
57%
Labor Costs % Operating Expenses
Labor Expenses Other Expenses
83%
17%
Percent of Workers Unionized
Unionized Non-Unionized
Labor Cost Uncertainty
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
20. Fading Competitive Advantage
20
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
LUV no longer remains a low cost leader
LUV
Other
LCC’s
Legacy
Cost
QualityofService
Other
LCC’s
LUV
Legacy
Cost
QualityofService
ULCC’s
ULCC’s
Cost
This graph is illustrative purposes
22. 22
Capital Structure Analysis
NM
2.0 x
4.0 x
6.0 x
8.0 x
10.0 x
12.0 x
Total Debt/EBITDAR
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
Conservative Operating Philosophy
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
FY05A FY07A FY09A FY11A FY13A FY15A FY17E
Historical Debt to Capital
As reported Adjusted
28. 28
RelativeValuation
North American
Airlines
Market Cap >1.5B
Revenue >1.5B
Screening
Criteria
Comparable Valuation
Multiple Turn Price
2016E EBITDAR: 4.4 x $30.47
2017E EBITDAR: 4.5 x $26.64
Normalized P/E Valuation
Comparable P/E: 24.7 x
Normalized EPS (LUV): 1.37$
Implied Price (LUV): 33.84$
0.0 x
5.0 x
10.0 x
15.0 x
20.0 x
25.0 x
Historical LUV EV/EBITDAR
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
29. Valuation Summary
29
$45 - $55 - $65 Brent
+6.5% SPE
$55 - $65 - $75 Brent
+7.6% SPE
Consensus Team Analysis
Adjust for Operating Leases (BOTH
LUV and Peers)
Add back full Operating Lease
Expenses (Aircraft + Facility + Others)
Integrate the impacts of labor contracts
Cycle-average EV/EBITDAR, normalized
P/E
(Some) Adjust for Operating Leases
Add back only Aircraft Rentals
Wait for new contract releases and
then revise investment thesis
DCF Analysis
$38.81
(50%)
RelativeValuation
$30.24
(50%)
Target Price
$34.53
(8% Downside)
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
30. 30
High
OR1
OR2 MR2
MR3 MR1
OR3 UCLow
Low Medium High
Impact
Medium
Probability
Legend
OR1: Operational Risk – MR1: Market Risk – Economic Uncertainty
Balancing Employee Compensation MR2: Market Risk – Commodity PriceVolatility
UC: Uncertain Catastrophes
Risk Analysis
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
31. 31
Market Risk
30
35
40
45
50
55
60
65
Manufacturing PMI vs Non-Manufacturing PMI
NAPMPMI Index NAPMNMI Index
Investment Highlights Company Overview Industry Analysis Financial Analysis Valuation Risk Analysis Conclusion
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
2000 2003 2006 2009 2012 2015
Economic Fuel Price vs Market Price
Carrier 2015 2016 Comments
Southwest 40% 20% Most heavily hedged (65% through 2017)
Delta 40% 5% Owns refinary to offset flucuations
American 0% 0% Does not hedge
United 22% 35% Opportunity to gain philosophy
Alaskan 42% 33% Uses call options as insurance
JetBlue 17% 0% Opportunity to gain philosophy
Virgin 27% 0% Hedged 31% H1' 16
Spirit 35% 0% No hedging target
Allegiant Air 0% 0% Does not hedge