The company I chose for this project is NETFLIX.
Here is the instructions about the project:
Students will use course concepts to conduct a fundamental analysis of the security to determine if that security is either undervalued, overvalued or properly valued based upon a review of its market price per share. Students will turn in a written fundamental analysis no later than May 17, 2016. The fundamental analysis of the stock must include the following valuation techniques:
• Dividend Discount Model
• Valuation of Free Cash Flow to Equity Holders
• Valuation of Residual Income
• Relative Valuation Ratio Techniques Based Upon Multiples of Earnings and at least two other measures of relative value
Students will be required to submit a written report that documents the intrinsic stock values obtained by using each of the above valuation techniques. Students will be required to provide references to all data sources and provide appropriate exhibits that display how calculations of intrinsic value were done under each of the valuation techniques.
For the purpose of assurance of learning, the Fundamental Analysis Project will be assigned nine scores that are based on validating ‘assurance of learning’:
1. Score 1: The demonstration of the student’s ability to identify how financial environment affects the value of the common stock that is being analyzed (FINC- LO1-A);
2. Score 2: The student’s ability to extract appropriate financial and accounting data from various sources in order to conduct and support the analysis (FINC-LO1-B);
3. Score 3: The student’s ability to use and appraise the data collected in a meaningful way (FINC-LO1-C);
4. Score 4: The student’s ability to estimate enterprise value creation and extract the equity value from overall enterprise value (FINC-LO2-A);
5. Score 5: The student’s ability to evaluate share value by reference to peer companies using relevant and appropriate benchmarks of risk and equity value (FINC-LO2-B);
6. Score 6: The student’s demonstration of resulting business strategies that may be driven by secondary ramifications (FINC-LO2-C);
7. Score 7: The student’s ability to assess risk (uncertainty) (FINC-L03-A);
8. Score 8: The student’s ability to justify her/his recommendation(s) (FIN-LO3-B);
9. Score 9: The student’s interpretation of the impact of the global environment on equity values (FINC-LO3-C).
The above scores will be used to assign a grade for the project